Deal or No Deal? Memphis, TN 38115 Not Turnkey!!

[Zack P.]

Hi BP Community!!

I finally found the right place to post this....I'm working on a deal right now in Memphis, TN and I was wanting to get some opinions on this. 

The property is in Memphis in Hickory Hill, 38115 and for buy and hold. I THINK these numbers are pretty conservative, but not sure. Here are the stats.

SFR, 3/2 + "extra room that can be used as a bedroom" 1300 sqf

Purchase: 56K

Rehab: 4k

ARV: 70k

Rent: $800 (according to PM, but I think it might be closer to $750)

Vacancy - 8%

Repair - 8%

Capex - 8%

PM - 10%

P&I - $270

Insurance - $50

Tax - $90

Cashflow - $120 ($100 if using $750/mo)

Deal or No Deal?

[Jason D.]

@Zack P. So here's how I do capex, take it for what it's worth. I dont like the percentage theory, I use real dollars.... I take a 30 year window, and take the three major capex items... roof, HVAC, and Water heater, and add their costs together. So say roof is $5000, HVAC is $4000×2 ( 15 year lifespan), and water heater is $1000×3 (10 year lifespan). That's $16000 in capex over 30 years, which is roughly $50 per month (I would go $75 to account for price increases and other misc. items like siding, windows, driveway, etc...) That's if everything is new. Since you are already 10 years in, divide that $16000 by 20 years and you're at roughly $70/mo. with no buffer. I, personally, would reserve $100/mo. for capex in your situation.