[Calc Review] Rental Property Analysis

4 Replies

Does this look like a good property to invest in as a rental property. Property looks to be in decent shape so not much repair work is needed but current rents are below market value and need to be raised.

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Hey Adam,

What is the current rent the property is getting and how confident are you that you will be able to raise it to $1,100? If you got the number from rentometer, that number might be unreliable. Maybe call a couple property management companies and ask them what properties in that area, within a mile radius, are getting for rent.

Since you are not going into it and doing some initial CapEx repairs to it, unless it is a fairly newly built property, you may want to factor repairs and CapEx at 14% combined. It looks like your PMI looks a little light. I think standard is around $77 a month on a $100K loan, so for a loan around $84K, I believe you are looking at closer to around $65 a month. Unless you already have that $25 monthly PMI verified with your lender.

The cashflow seems to be cutting it close, maybe try to sweeten the deal for you by getting some better terms to increase the cash flow. Possibly seller financing with little to no interest with a small down payment. Asking for a repair credit at closing to get some new CapEx items to lower your long term costs. Or even attempting to negotiate the seller down an extra $5K. Good luck!

- Lucas Duce

@Lucas Duce My rent estimate is on the very conservative side. Rentometer says the average rent for a 2 bedroom 1 bath place is $736 so that would be $1472 a month in rent which is way above my number. I think this place is a little bit on the lower quality side so rent would be a little less but when I was looking at places to rent for less than $600 the only places I found were not as nice so I'm pretty confident I could get closer to $1200 a month in rent. 

The PMI could be a little higher. I just compared it to the PMI I am paying on my own house which was only purchased a few months ago.