[Calc Review] Help me analyze this deal

7 Replies

@Tyler Smith , a few places I would tweak:

  • Vacancy may be a bit high. I figure 8%, but this is very localized.
  • Repairs and CapEx look high, too. 7.5% each should be fine, unless there are extenuating circumstances (e.g. very old property, student / low-income housing with higher repairs)
  • Insurance looks high for a house at this price point. Have you talked to an insurance agent?
  • Taxes look low, but Texas can be all over the map (or so I hear). Have you confirmed with the town?
  • You're not factoring for Management (10%). Include that even if you plan to self-manage at first.
  • Any utilities that you'll be responsible for? Water / sewer for example.
  • Most lenders require a 6-month seasoning period before they'll refi using a new appraisal.
  • 3% loan on an investment property? That sounds...optimistic. If you have a lender that offers it, please let me know!

@Jaysen Medhurst

Thank you for taking the time to respond. I know some of my numbers are wrong. This is my first time trying to run the numbers on properties. So yes my loan number is definitely off.

The taxes I just used the proposed tax rate off of the county website multiplied by the purchase price (I know that’s not going to be entirely accurate but I thought it was a decent starting point). Taxes in small towns in Texas are a good bit less than major metropolitan areas.

Looking at this as an example, what metrics do you like to focus on when determining whether to further investigate a potential property or to discard it and move onto the next? I’ve been spending a little time in the blogs trying to learn and take notes (and plan to spend a lot more). Any recommendations on starting points would be greatly appreciated.

@Sam Shueh

Yessir I know my loan numbers are completely unrealistic.

I was hoping to gain insight as to what metrics you focus on when analyzing deals to help you weed bad deals from the maybe deals that you want to explore further.

Thanks for taking the time to respond.

One step at a time redo post it after research for more realistic data. One can not quantum jump into conclusion thinking you get it right.  You may want to post address, town, state property details, age since they affect the bottom line.

Good luck,

Sam Shueh

@Tyler Smith , I like to see $150-200/month/unit cash flow. A CoC ROI in the mid teens or better, with traditional financing, 25% down.

Make sure you adjust your debt service numbers, they'll likely be $100-150/month higher than what you used.

So far there has been lots of good suggestions.  For some making $2K profit is adequate. Others (majority) think they can spot deals quickly. The potential getting a good deal is not what it used to be. I am aware many flippers start going out of business.

Every home owners realize the technology gives them an AVM value which is not far from retail. So why should someone want to sell it below market price?  For beginners a solid home with min repair is where you should start.

You go to high rent neighborhood buy a home below market.