Help me Analyze a SFR Rental Purchase

[Christopher J Lemmon]

Here is my latest deal. After waiting for two years for another duplex in my target zip code to come up for sale, I was pumped when one did for 80K even though it needed some work. I bid over list the first day it came on the market. 

So I decided to start a new strategy, look for a single family home rather wait for another multifamily 2-4 unit to come up for sale. 

Here is what I found in my target neighborhood. 

SFR

List Price $69,500

1044 Barnett Ave,

Kansas City, KS 66102

List price: $69,500

3 Beds

2 Baths

2,414 Sq Ft

Currently Tenanted at $900/month for the next 10 months

The estimated life left on the roof is 5 years. All the appliances are relatively new 1-5 years. 

The house is C4 - functional but it does show signs of wear and tear. The tenants like the house and want to stay.

Finance - 80% LTV

Down Payment - 20% 

$13,900 (DP) + $4400 (Closing Costs) + $360 (Inspection) = $18,660

Monthly Expenses

Management = $90

Repairs = $50

Cap Ex = $75

Taxes = $54.75

Insurance = $88.09

Vacancy = $75

Mortgage $307

Total = $739.84

Cash flow = $160.16

Projected Return = $1920/$18,660 = 10% Return 

[Dennis M.]

Repairs capex vacancy and possibly your taxes ( 600$ a year really ?) are way too low of estimation imho . Paying 70 grand for a house with a roof in its last leg that gets 900$ a month is not going to get you 160$ in real life cashflow and even if it did that’s like a 10% return .might as well buy into an index fund and do nothing if that’s all your happy with .id pass , this is a marginal deal