Help me analyze this deal

6 Replies

I have been analyzing several properties. All the numbers look like they are good deals. Am I missing something in my calculations? Is it ok if I do not meet the 2% rule if my cash flow is over $100/unit?

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


@Jody Vilcheck you're going to have to adjust for property tax when you buy it. It's assessed for 58,000 which will be changed once you purchase the property. I love the name of the owners and the price they bought the place for back in 2015. Nothing like good ol Buffalo! The property makes for a good investment, Buffalo is seeing much love from out of state and NYC investors. But I only know that because I know a few people up there. I'm sure others from Buffalo can chime in. Good luck!

@Jody Vilcheck I purchased property in buffalo two years ago and last year. They were both reassessed recently for almost double. The taxes on one decreased and the other increased by $41. I haven’t done a deep dive to see why but that’s what was on the assessors statement. Are you owner occupying the unit? If not I’m interested in what bank you’ll be using to get 4% for 30 years on an investment property. I have great credit, two years of rental income, w-2 income and can’t find below 5%! Thanks!!

@Jody Vilcheck your expenses are low. I use 23% for vacancy,repairs and capex you are at 15%. Let's just say there is 3000 sf of flooring that was just replaced. Life span is 8 years and it cost $6 sf. 3000*6/8/12 months in a year= $188 per month for 1 item. Roof 25 year life span, appliances 12 year life span, hot water heater 12 year life span, hvac 20 year life span. The 2% rule is for ghetto property and the evictions and turnover make it unable to cash flow. I look for at least 10% cash on cash.

@Jody Vilcheck here is what you are missing as I have been in this property several times. There is really shoddy maintenance work done on every apartment. The mechanicals are old, and $2000 is on the high side of what you will bring in. Your repair costs should be closer to 8-10% for this property, CapEx 7-10% and rent is more likely around $1700 + What @Ashley Kehr said about your interest rate.  

IN short, you are really underestimating your costs, and overestimating your rent.

@Ashley Kehr I am new to the investing that’s why I was asking others for their input. I was using 4% since that is what is used in the free webinars on Bigger Pickets. I asked the mortgage officer I have been talking to and you are right the rate is a little above 5%.

@Jody Vilcheck The entire city of Buffalo has been reassessed. You can check the reassessment at:

https://buffalo.oarsystem.com/Home.aspx

It looks like the new assessment on this property is $116,000. 

The current homestead tax rate in the city of buffalo (City, School, Sewer Rent, and County) is $27.43 per 1000. This can be found here:

https://www.buffalony.gov/DocumentCenter/View/6039/2019-2020-Tax-Rate-Per-M

Based on this info your yearly tax will be around $3181.88 or $265/ Month.