Rental Calc Review - Please help me analyze this potential deal!!

5 Replies

As someone who has no experience in real estate investing, but am ready to get started, I’m open to any advice or tips about this rental analysis! 

Due to my lack of experience, I have a hard time accurately plugging in numbers such as closing costs, fixed/variable expenses and any necessary repair costs, although I have connected with a couple contractors to help with that. I am kindly accepting any suggestions to help me analyze this potential deal.

I see a few things wrong with this analysis.

1) Your vacancy rate is at 2%. It depends on the area, but you should at least start around 5%.

2) Your down payment is 5%. In this market, I've never heard of anyone ever getting a loan with a 5% down payment.

3) Your repairs are at $1,000, which might be good or bad in some cases. In this case, make sure to inspect the property BEFORE buying it.

4) Make sure your rent estimate is not to optimistic.

Hope this helps!

Originally posted by @Caleb L. :

I see a few things wrong with this analysis.

1) Your vacancy rate is at 2%. It depends on the area, but you should at least start around 5%.

2) Your down payment is 5%. In this market, I've never heard of anyone ever getting a loan with a 5% down payment.

3) Your repairs are at $1,000, which might be good or bad in some cases. In this case, make sure to inspect the property BEFORE buying it.

4) Make sure your rent estimate is not to optimistic.

Hope this helps!

Hi Caleb, thanks for the feedback! Regarding the vacancy rate, noted! For the down payment at 5%, I'm still learning about the lending process but I'm looking to somehow be able to put less than 20% down to lower my investment basis. 

One of the agents I'm working with sent me this property and it is a turnkey rental so I don't expect to put much at all into repair costs, I just tried to play it safe with $1,000 allocated to that. I had the "play it safe" mentality with the rent estimate as well as $1800 is more towards the lower end. Thanks again for the feedback!
 

@Anthony Venezia - several things:

1. You're not going to pick up an investment property using bank financing without at least 20% down, realistically 25-30% down. If you don't have that, then time for a different strategy.

2. @Caleb L. already mentioned Vacancy; let me add the following suggestions: remove PMI (because you won't get investment financing needing it), the listing appears to show an addition city tax of $1268/year, that should be added; it's a townhouse, what's your reason for paying water and sewer? I'd thrust all that upon the tenants. Good luck!

Originally posted by @Tchaka Owen :

@Anthony Venezia - several things:

1. You're not going to pick up an investment property using bank financing without at least 20% down, realistically 25-30% down. If you don't have that, then time for a different strategy.

2. @Caleb L. already mentioned Vacancy; let me add the following suggestions: remove PMI (because you won't get investment financing needing it), the listing appears to show an addition city tax of $1268/year, that should be added; it's a townhouse, what's your reason for paying water and sewer? I'd thrust all that upon the tenants. Good luck!



Thanks for your feedback! I will start to strategize around having to put at least 20% down. I just hate to have my investment basis be so high, therefore lowering my ROI. That's why the BRRRR method appeals to me and I am learning more about that. Regarding the other monthly expenses, noted! Thanks again!