Newbie Analysis Feedback Requested: Sanity Check please?

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


I'm looking into my first potential rental purchase.

One thing that's concerning me is this:

In the Analysis Over Time table, the Annual Cash Flow actually goes down, not up.

Am I missing something here? Can expenses really go up that much? Is this a bad deal? 

For context, I put some conservative numbers in here but for the most part, they do align with the numbers I was provided by my agent. 

Would really love some feedback here. 

@Ross Bowman

Personally I would walk from the deal as is today. There is very little room for error and if things go PERFECT (meaning no vacancies or repairs) it would take 45 months to get your downstroke back... I use 36 months as my line on cash flow deals that I plan to hold. I assume the best and know it will not go perfect but at a 33% return on capital things can go a little bit less than perfect and not kill me

I would fight on price so you only put $11k down... that hits the 36 month return on cash mark

Originally posted by @Matt Lyons :

@Ross Bowman

Personally I would walk from the deal as is today. There is very little room for error and if things go PERFECT (meaning no vacancies or repairs) it would take 45 months to get your downstroke back... I use 36 months as my line on cash flow deals that I plan to hold. I assume the best and know it will not go perfect but at a 33% return on capital things can go a little bit less than perfect and not kill me

I would fight on price so you only put $11k down... that hits the 36 month return on cash mark

Thank you sir! I appreciate the feedback on this. 

As a follow-up question, I put in 8% for repairs and 10% on Capex (monthly) to get these numbers. Is that unrealistic?

My idea was to punch in numbers based on worse-case scenario, to see where it would stand if things like that went poorly. So these numbers are based on that. 

 

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