Help me analyze this deal

4 Replies

Hey BP!

Check out this deal I've been looking at. Short term, it looks like a good deal but long term, not so much. 

What are your thoughts on this? As I'm fairly new to this, please let me know if you see something I've totally missed. Thanks!

View report

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

@Roselin G. First thing I noticed is the loan to value represented on the report. With 5-10% down, that makes me believe that you are going to live in this property. Does that sound right? Typically an investment property financed with a bank requires 20-25% down. See below for a couple of other things after reviewing the form.

1. Have you talked with a bank yet? In my experience a bank that gives out investment loans on 5-10% down, 30 year fixed interest is rare (I would even say unheard of). If you did find a bank that offers this feature, hold on to them as this will be helpful for expanding your portfolio.

2. The photos look great, so I would jump on this deal immediately. :) I am joking. Having the vacancy, capex, ect. accounted for is always a good measure. Nice job adding that into the math.

3. With an overall understanding of the market today, finding a turkey property with gross rent hitting above the 2% rule of thumb seems rather high. Confirming the loan options may change this result. 

4. Best of luck

Howdy @Roselin G.

What is the Misc expense $450? You did not include a line item for Property Taxes or PMI. PMI is required for deposits less than 20%.

Why are you using 5% for Expense annual increase and only 2% for income?  If you know expenses will grow that fast you need to increase income the same.

What type property is this?  Age?  Current condition?