Property in Long Beach, Feedback on Analysis?

2 Replies

Looking at this property in Long Beach and here is my analysis.

*Just for deal analysis practice, looking for some feedback to see if i should increase some expenses or add some missing expenses that I didn't account for. 

240 E Louise St Long Beach 90805

Lets say I purchase for 365000

Maybe rent it out for 2400 (too low, too high?)

Expenses 

Property Management Fees - NA
Repairs and Maintenance 50.00
Real Estate Taxes 400.00
Rental Property Insurance 100.00
Vacancy 100.00
Capex 100.00

Monthly Operating Expenses 750.00 

Loan

Down Payment 73,000.00
Loan Amount 292,000.00
Acquisition Costs and Loan Fees 10,950.00
Length of Mortgage (years) 30
Annual Interest Rate 5.000%
Initial Investment 83,950.00
Monthly Mortgage Payment (PI) 1,567.52 

Cash Flow: 2400 -  1566 - 750 = $82

ROI: 1.18%

According to this analysis, this isn't a good property to invest in. Any feedback would be appreciated! 

Thanks in advance!

Peter Bui 

Pretty solid numbers- few points to consider: How did you come up with $2400 as the gross monthly rent? There's not a place within 15 blocks over $2,000 according to zillow. Regardless- let's assume you rent it out for 2400.

Maintenance- I like to set aside 5% minimum- and that's if the place is a new construction or fresh rehab.

Capex- prorate the cost to repair your roof, boiler etc.. If you think the roof has 10 years left and it will cost 20,000 to replace, set aside 170 per month.

Utilities- you did not include a line item for utilities, I'm assuming your tenants will be paying everything.

Vacancy- I like to set aside enough each month to be able to cover 1 month rent per year. In this case, I would set aside 200 per month. After your tenant's 1 year lease is up you will have enough saved to hold the place for 30 days without seeing any change to your cash flow.

Best of luck to you sir!

@Victor Steffen

I was looking on Craigslist and people were renting out 1500 for a 1 bedroom so I just used 2400 for the purposes posting this. But I can come up with better comps next time.

I like your thinking for maintenance and capex.

I also like your thinking for setting aside one months worth for vacancy.

I’m going to adopt and steal these calculations!

Thanks for the feedback!
Happy investing!