[Calc Review] Help me analyze this deal

6 Replies

@Valerie Winrow , I'm no Section 8 expert, but I believe some require that the landlord covers utilities. I'd double confirm that the tenant is responsible for gas, electric, water/sewer, lawn care, and snow removal (it snows in Kansas, right?).

  • Vacancy is probably low. I usually figure 8%, but with a solid Section 8 tenant, they may stay for years and years. 
  • I would bump CapEx and Repairs to 15% combined.
  • Since this isn't owner-occupied, you'll most likely need to put down 20-25%. 
  • our interest rate isn't going to be that low. Probably closer to 4.5%. Check with some local banks / credit unions.
  • There will definitely be some closing costs. Again, check with the bank, but probably ~$4k.

Might still be a winner, but you need to re-run your numbers.

@Valerie Winrow Hey Valerie, welcome to BP. 

First, I don't think this is a particularly good deal for a variety of reasons. The assumption that $10,000 will be magically added post-acquisition without any rehab spend is dangerous because I looked in the area and houses similar to this one are not listed for $47,000. 

In addition, your vacancy [3%] and repair [3%] percentages are relatively low to what things would actually cost because of the low purchase prices and low monthly rent income. 

You may be able to justify this if it is an all-cash purchase and you self managing the property and even that might be somewhat questionable, so you really might want to reconsider this deal before moving forward with it. 

Hope this helps. Good luck. 

I know the area that is at, it’s a pretty high rental area. The rent is on the top end of what you might get, but don’t be surprised if it’s only $550. 

I think you need more capital money planned, and depending on what it needs, I would question purchase price. I assume you are getting this from one of the local wholesalers. 

Your interest rate isn’t going to be that low. My guess would be 5%, and 20% down for an investment. Given the age of home, etc, I would agree on the prior comment on cap ex. It also looks like an old t-lock shingle from the pictures, which means it’s old because they don’t do that type anymore, and you are not roofing over that if it has issues and it’s going to be a complete tear off.