[Calc Review] Help me analyze this deal

4 Replies

Hello BP,

Ive analyzed this deal I've found on the MLS and am kind of curious on why its still on the market? It seems like a good deal to me, but it also seems too good to be true. The price in the report is actual asking price on the MLS. I am also using an FHA loan and my own money for rehab.

Am I do something wrong here? Again, it seems like its too good to be true..

View report

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

Howdy @Christian Laines

Your Cash Flow analysis is missing Three key expenses used in evaluating properties. Insurance, Property Management, and Private Mortgage Insurance (PMI). You can get a free quote for the insurance. It is recommended you include PM when analyzing for two reasons. First, if you are planning to self manage your time is worth something. Secondly, if you plan to expand your portfolio you may eventually want to use a PM Service. If you did not include it in your original analysis it will be difficult to add it later and remain a good Cash Flowing property. The average PM cost is 10%. PMI is required by lenders when you have less than 20% down payment. The cost is a percentage of the purchase price. Typically between .3% and 1.5%.

After adding these expenses into your calculations you may find it doesn’t cash flow quite as good.  Just look at the 50% rule cash flow to have a conservative view.

Do you know if the tenants pay for all utilities?  

Remember when you use an FHA loan product you are required to live there for a minimum of one year. Which means the income you are showing will be cut in half while you are there.

To John's point, you want to check about utilities. Also is 7% vacancy a good estimate? typically MFH has higher vacancy than SFH. more CapEx and repairs as well.

5% interest might be a little tough to get right now.  Check your property tax numbers too, you pay $1400 in a year which is only 0.6% of your purchase price, which may be reasonable for TX but i'm not sure....?

I think if you are living there yourself you can still count is as a "income" because you are basically not paying rent for wherever else you would be living if you didn't live there. 

One other thing is description says one side of duplex is fully updated.  I assume your $25k upfront fix is for the side that's not updated? Maybe there are foundation problems or something that's keeping other investors away?

If all of these points are validated i think its a good deal! 

@Michinori Kaneko I have a lender I work very well with that is also a business partner who can get me about a 4.8% interest so to answer your question, yes under 5% interest still exist. Lol just dont know how much longer. 

Also  I was accounting the 25k for the side that wasn't  fully updated. But thanks for the info! Greatly appreciated.