[Calc Review] Help me analyze this steal, I mean deal?

Question

Hi all,

My name is Obed. I am prior military (AF) and an air traffic controller. I’m new to BP and REI in general. I am also new to the Pensacola, FL area.

I’ve been trying to analyze listings on the usual sites and what I receive from a real estate agent. This duplex popped up and seems like a home run for my “criteria”. I have a couple of requests with this post. Can someone double check my work because the numbers look so good I feel like I’ve entered something incorrectly? :). Next, I’m currently not working but I have some money saved up, and my fiancé (we live together) has a new nursing job. Will that be a problem for a traditional lender? I want to use a VA loan, would they take into account her income? Any solutions/suggestions?

Thanks in advance for your time and replies.

View report

*This link comes directly from our calculators,                  based on information input by the member who posted.

Jeremy England · Answer

Looks like a good deal if you plan on living there.  Its not a BAD deal if you don't plan on living there you'll just have to figure another way to pay for it.

If you are both on the mortgage, both incomes can be counted.  If its just you, then only your income.

Also keep in mind your closing costs.  The VA funding fee is going to be about 10g with this loan.

Obed Salazar · Answer

So I ran the numbers by my real estate agent who also has experience investing. At $1,200 rent per unit, it is quite the money maker even before negotiating price. Unfortunately for me, the rentometer prices I used for my calculations are way of base for a multi family. Actual multi family comps in the area rent between 650-960 tops. That’s a loss of $480 from income, making this strike instead of a steal. Thank you to everyone that read my post and those that commented.

Taylar Caraway · Answer

Hi Obed, welcome to Bigger Pockets!Based on what I see on the report, you seem to be low with vacancy, capex, repairs, and management. What year was this built? Has anything been updated within the past few years? Looks relatively new(ish) from the picture but either way I think 5% on CapEx is low. I suppose 5% on repairs could be okay but it depends on the condition of the property and the type of tenants you'll have in that area.For management, usually I will put at least 10% in my analysis (especially for a duplex) as any property management company will typically charge a placement fee (usually 1 month rent) when they place a tenant in the unit. So with $120(12) = $1440/year which won't be enough for 2 units if you have to replace both sides. Even if you plan to self manage, always include the management fees in your analysis so you don't get stuck in a situation where you have to self manage in order for the deal to work. You never know if you'll still want to manage it in 2-3+ years.Will you have any other expenses? Any utilities? Water/garbage/sewer? What about lawn care? All things to consider.Also I see that your ARV is less than your total project cost? If that is the case, then cancel everything I just said because it's definitely NOT a good deal. Do you plan to owner occupy the property?

Obed Salazar · Answer

Hi Jeremy,

How’d you get $10k funding fee on this property? First time use, no money down is 2.15% according to va.gov; so around $4065. Are there other costs that would bring the total to $10k? I didn’t mention all the specifics, but I won’t pay funding fees due to service connected compensation.

Obed Salazar · Answer

Thanks Patrick for looking it over. I got those figures for vacancy and CapEx from Brandon Turner. I see you’re in Pensacola as well, is 8-10% and 7% what you use locally? I am aware of the intent.

Patrick Daniel · Answer

Hey Obed,

Looking over your numbers there are a few things that look like they may need to be tweaked a little bit. I would probably estimate vacancy at 8-10% to be safe as well as raising your CAPX and repairs to 7%.

When you look at it, with the 50% rule it would be cashflowing just over $200 a month rather than $600.

One other thing to think about is the residency requirements of the VA loan. With this type of loan, you are required to intend to be an owner occupant of one of the units for the first Year.

[Calc Review] Help me analyze this steal, I mean deal?

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