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So I can clearly see this is a dud but this is just my first analysis of the property with the info the selling agent gave me and the asking price. Now I guessed my interest rate using my my credit score and a few websites so I don't think that is the best way to get them and if anyone can give some insight on how to get more realistic rates I'll really appreciate it and ill refine the report. But Id like to know if this looks right to the BP community. For this to ever work they would need to drop the price and I think it is possible but most of all I want to know if this was done correctly and I'm not getting blinded by forcing it to work numbers wise so, Thanks in advance!
@Gerardo Lewis thanks for sharing this!
So first thing I see is the total cost of project is 27K more than the ARV. If this ARV is accurate and the repairs are also accurate you can approach this with the 70% rule. Take the ARV and multiple it by .7 ($227,500) then subtract the repair cost of 50k ($177,500). This is based off accurate numbers (ARV off comps, and repairs based off a contractor bid). This is just a starting point and you can tweak the numbers to make it work for you. Every property has a number that makes it a deal so this particular property's number is way less than the asking price based off that rent income. You might be willing to raise your purchase price to say 200k if the cash flow meets your requirements.
It also wouldn't hurt to get pre-approved for a mortgage to see what rates and amounts you can qualify for.
Your vacancy also looks a little low to remain conservative. I would put a 5% to keep a little cushion.
Lastly I would put a little more towards repairs. $48 a month for a 4plex might not keep enough cash in escrow with the management company and the last thing you want it to dip into your cash flow to fix something.
Speaking of property management, have you contacted on and been told their rate is 9%?
Good luck! Hope this helps even a little.
@Alexander Wardell sorry for the late reply but this was a lot of help more than you now I'm taking a look at the ARV again, I realized my mistake with it. And I'm taking your advice about the vacancy and repair percentages. Thank you for the insight and different perspective on the situation it was just what I needed.