[Calc Review] Can i get some feedback on this deal?

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Hey guys,

Any kind of feedback on this deal would be greatly appreciated! 

Thanks, 

Hi Bernadeau :)   Sheri here, under my husband's login.  Are you really able to do a zero down loan at 3.5% on an investment property in Orlando? Or was that a mistake?  Who are you using for lending??

it's going to be a VA loan

Initial glance looks good. How strong is the rental demand in this immediate neighborhood? What are the long term prospects of the community? Are you investing mainly for cash flow, appreciation, or long term equity build?

The rental demand is pretty strong in this neighborhood and I am mainly investing for cash flow 

Quick clarification...u show an arv of $275k but don’t show any money in repairs. Won’t change much of ur financials, but good to get it all covered. Looks good tho!

Thanks Dustin! 

Deal looks great to me. Good luck!

@Bernadeau C. what kind of repairs are we talking here? In order to pass VA appraisal the home must pass the 3 Ss; Safe, Structurally Sound, and Sanitary. The BLUF is it must be livable when you purchase it so a home that needs major repairs will not be VA eligible.

the units are currently occupied so I anticipate little to no repairs beyond cleaning the carpet and pressure washing the outside. 

You're buying the house for $225k, putting 0 into it, and it's instantly worth $275k? If that's true, then you better get it under contract before the seller finds this forum.

I'd say it's also a bit naive to expect the house to be perfect beyond pressure washing and carpet cleaning. You'd be surprised what people will live in, especially long-term owners/tenants who tend to neglect basic maintenance. For all you know, any or all of the roof, plumbing, and electric might need complete overhauls. If it's a frame house, then the wood could be rotted. These are things that are not visible to the naked eye. Maybe the house is perfect but are you prepared to handle something major if needed?

Considering your COC is like 170%, then there's still plenty of meat on the bone to buy it even if you needed to add $10k-20k in upgrades.

I am counting on the inspection to tell me if anything major exist that the naked eye could not see but to your point even with some repairs 10K plus I should still be in good shape. The arv is my estimation but I'm waiting on comps from my agent to see how close or off I was. 

@Bernadeau C. Looks like a good deal, but some of your assumptions seem a little optimistic. 

1. Since its a VA loan, it won't cash flow for at least a year since you'll have to live in one side.

2. Have properties in that area historically appreciated at 1% over inflation?

3. What year was it built? Unless its new/newly renovated, CapEx and Repairs are too low.

4. Closing costs are too low. $2.5k won't cover your funding fee. 

5. You plan on having it vacant one month out of every 33 months?

Originally posted by @Bernadeau C. :

I am counting on the inspection to tell me if anything major exist that the naked eye could not see but to your point even with some repairs 10K plus I should still be in good shape. The arv is my estimation but I'm waiting on comps from my agent to see how close or off I was. 

Just think about that 275 number on your report logically. If you're buying it for 225 and planning to put zero work into it, then how is it suddenly worth 275? This is basically saying you're making 50k on paper just by putting your name on the deed. If this is true, then who cares if it cash flows? Just buy it!

Unless the seller has just fumbled the ask price to the nth degree here (I mean it does happen, but this would be pretty severe), then I think you might be skipping right to the "V" in "ARV" and ignoring the "AR" part.

thanks guys for all the different perspective, I would definitely take it all into consideration. 

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