[Calc Review] Help me analyze this deal

5 Replies

I'm seeing these reports getting posted here and don't understand why it includes the 50% Rule Cash Flow Estimate section. In my opinion it's wildly off when it comes to estimating monthly costs. 

In the section above you list expenses (property tax, CapEx, maintenance, insurance, vacancy, etc.) those numbers look high but safe. I'd guess you haven't researched them very much. Then the report spits out a 50% rule and takes $2600 per month to $2000. That's a huge difference in cash-flow each month.

Hi, @Akpedje Akoussah ,

Do you think you can get higher rents after the renovation? I'm seeing $750-850/month on Zillow. 

I think that your expenses need some adjustment.

  • Vacancy is high. I usually figure 8%, this is super local, though.
  • CapEx and Repairs are usually good around 15% combined. Did you assume higher because you know of issues that will have to be addressed?
  • You're forgetting water/sewer. Usually $30-40/unit/month, but confirm with the local water department.
  • Any other house utilities, like electric for hallway lights?
  • Lawn care/snow removal?

If you can get $800/month average, I think you could cash flow $450-500/month. That's a CoC ROI of ~8%. This is lower than I would like to see. It's the taxes that are really killing you.

Thanks, @Jaron Walling and @Jaysen Medhurst for the reply. I'm new and was going with the safe 50% expenses. Yes, rent in the area can be in the $750-$850 range. The place has actually been remodeled recently. CapEx and repairs should just be average from what we know. I'll be sure to add water and sewer and missing expenses.

@Jaysen Medhurst what is your guideline for CoC? Thanks

@Jaysen Medhurst wow those are awesome numbers. I got some more digging to do around here :D to find properties with those numbers one day.
Here rent is not that high so, I play will the BP calculators to familiarize myself and just to see which purchase price will bring those kinds of numbers. I have to find a killer deals to achieve that but I understand they are out there if you keep looking.  Thanks again for sharing with me.