[Calc Review] Help me analyze this deal I suck

2 Replies

So on today's webinar Brandon said to put everything into action. This is my first time I analyzed a property. EVER. I am so confused. I put in as much info as I could gather at the time. I used a website to get me estimates on rents in the area. This house is move in ready . These numbers are horrible as far as the cash on cash returns. Would an investor ever want this deal? The investor would do his own due diligence with the numbers right? Am I expected to come with correct numbers 100%??  So many questions of a newbie. I will not stop analyzing!! #90daychallenge 

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

Hmmmm. I am guessing this must be a property in a very desirable area near a metropolitan city? It is pretty pricey for a duplex. But with that said, the numbers such as ROI and the rent to price ratio and cap rate are poor. However with any deals, there needs to be an exit plan. So what is yours? I see a good BRRRR or quick flip scenario if your ARV is correct. That is alot of instant equity. Good luck!

Howdy @Stephanie Owens

This is not a good deal period. Unless you like to pay cash and have no financing. Not a good return on your investment (2.53% ROI). Most investors will finance the property. This in turn will give you a big mortgage payment. Which your rental income will not support. Example:

Purchase Price $650,000

Down payment $162,500 (25%)

Loan Amount $487,500

Interest Rate 5% APR

Amortization 30 years

Monthly P&I payment $2,617

Cash Flow = $3,580 Rental Income - $2,172 Monthly Expenses - $2,617 P&I = - $1,209 (Negative CF)

When you look for good deals the Rental Income should be as close to or better than 1% of the Purchase Price.  That way you have a better chance of positive cash flow after financing.