Help me analyze this deal. It looks like a no brainer to b&h

5 Replies

I've not looked at the BP calculator but done plenty of SF analysis myself.  On the surface, it looks like a great deal, but I would dig a little deeper.

Personally, I don't like a 50% estimate for expenses.  It really isn't  hard to more accurately estimate the expenses.  Here is what you need:

 - Taxes - These vary from state to state and Texas has higher property taxes than other states.  Zillow provides a quick source, but maybe not the most current.  In almost every community, you can also look the tax rolls up online and get the EXACT number

- Insurance - Galveston is in a hurricane zone.   So, your insurance might be much higher than the national average.   Call a broker and get a quote so you know the EXACT number

 - Vacancy - This has to be an estimate.  I usually use 8% of rent, but that is probably on the conservative side.

 - Ongoing Repairs - These can be highly variable, but in my portfolio, long term, I was spending $150-200 per unit per month.

With about 2 hours of work you can be sure the numbers are spot on.  If they still look as good as the estimate, I'd buy it.

Good luck

@Steve Martinez - it looks good. You’ll be cash flowing even you set aside a budget for Utilities and Property Management.

@Steve Martinez , hmmm. What if the Lender only grants a 20 yr loan? What if vacancy turns to to be 8% (or even more)? What if the repair estimate is not conservative enough? What about property management expense? Utility expenses? What if $1,200/m rent is not achieved? (etc?)... 

Arguably, not enough added equity to allow a Refi to get ones deposit back.

[ie. Leaving $35k in the deal for the foreseeable future means: Not really a no brainer]. Cheers...

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