Looks pretty good actually for first run. Only highlights I see are:
- taxes are VERY low but assuming those are known historicals which they should be so fine;
- Grass Valley sounds pretty small and your vacancy is only 4%. National average is closer to 8% and I would guess if your unit goes vacant in a small area, it might be vacant for a while (at least if you are screening tenants). One month vacant is 8%.
- Closing costs seem a little low if you factor in inspections, travel if you are going to look at it from out of town, loan fees, title, etc. Might want to bump that up some.
I would say that if you are rock solid on what the costs are for utes, taxes, insurance, etc and or you are willing to accept the return using that 50% rule for cash flow (yes it might be better as you show BUT.....) which shows a return of about 470.00 a month, go for it.
Lets see what other more seasoned guys come up with.
I know Nevada County fairly well, used to have a handful of rentals there, only one left in Grass Valley. Looks like a darn good deal from the info you provided! With that said Unit #2 is leased for $1600 a month? Sounds a little high for a small 3/1 that's part of a duplex (SFR would make more sense at that price point). I would dig into the details a bit there see if that rent is truly market rent, feels high.
Vacancy rates and rental inventory is at an all-time low in the area, looks like an interesting purchase.
Thanks for the reply John. I will admit the toughest part of the calculator for me is really pinpointing the rental income correctly. What I did was type in "Grass Valley" on Zillow and look at rented houses. These were my comparables. Any other suggestions on how to find rents accurately?
@Patrick Hall The taxes were straight from the payment calculator on Realtor.com for the property listing. Could that be inaccurate?
Re: vacancy - see John's post below. He said vacancy is at an all time low in that area. Raising the vacancy a couple points didn't hurt my cash flow too much though.
I'm still a little confused on what to buy based on - the monthly numbers at the top or the 50% rule! On his videos Brandon insinuated the main numbers CF at the top, not the 50% rule CF, were more indicative. What do you think?
From the scenarios I've looked at, the taxes on realtor are about 50/50. I ALWAYS go to the county assessor webpage for taxes.
@Kyle Marek call some property management companies and ask them what market rents would be. Mountain Valley Property Management handles my remaining property in Grass Valley, I am sure if you described the unit to them, they would tell you market rent. Can't hurt to call a couple of other companies as well.
If this was a stand-alone house $1600 is very achievable. Since it's part of a duplex and/or has a shared yard it will likely rent for a little less. It says unit #2 is rented, what is it rented for currently?
Also, how bad is the road noise? The property is situated in a funky little spot, I almost bought a property just down the road 4 or so years ago.
I am a recent transplant to Grass Valley and may be able to add a little insight:
Property Taxes on a $230,000 purchase will be around $2500/yr, give or take. Looks like my tax rate is 1% so yours might end up touch less than $2500.
I own a 3000sf, 4 bedroom/2.5 bath SFH that recently became my family's permanent residence. But we bought this a year ago and leased it until we moved in. I can tell you that we had no trouble finding a renter at $3000/mo, even though we told them upfront that the lease would only be for 10 months. It took about 2 weeks to get it leased. I have been told by realtors that rents are very strong, especially at lower price points. So $1600 may be possible. I'm guessing I could've easily gotten $3200 for a long term lease. So half that amount seems like it might work for a 3/1 in a duplex. My house is probably not a great comparable, so take my opinion with a grain of salt!
You're correct about the property taxes. They were $2400 last year.
In order to get information on rents, would it be better to call a property management company in the area, or the agent on the property listing? For this property and future house hunting as well. To find out about the noise and such that would be a question for the listing agent, wouldn't it?
Call a property manager in the area. They will likely have more expertise in the rental market and also won't have quite the profit motive as the agent.