[Calc Review] Help me analyze this deal

7 Replies

Before thrashing the whackey numbers, please read so I can provide more info.

Ok, so first time utilizing the VA benefit (Disabled 40%+) for this single family home as a buy and hold, and here are the following details.

Due to the VA having such strict requirements, I am looking for a turnkey property to speed up process and quickly get tenants in with little to no time or money going into repair/ rehab.

Loan details (I am preaproved, but these numbers are pretty accurate and I elected to put a high interest rate so anything lower will be a bonus):

Loan Amount: 170k

Money Down: 0% (Hence the high COCROI numbers)

Lender points charged .85

Interest: 3.65

Closing Costs: 1% Earnest Money ($1,700) + $800 (Appraisal, Inspection, etc.) $2,500 

*I am close to Title Company which is giving SUBSTANTIAL deal to seller if they choose to use them

I understand this may seem low to most reading, but from what I understand from what lender advised me, VA Loans with 40%+ benefits will typically cover several fees and the closing costs, and sometimes it is often times covered by seller.

The home is listed as 175k and is completely renovated (ie. 2019 new metal roof, upgraded plumbing, wiring, tile flooring, paint, new kitchen, vanity, bathrooms, HVAC).

The property is very popular on all MLS portals and has been listed for only a few days.

The location is GREAT and surrounding similar home values are above the listed price 170k. The area is BOOMING with massive amounts of jobs and retirees moving into this Space Coast Florida neighborhood surrounding by massive tourism, residential, LARGEST DOD Contractor and Space Industry, and other industrial developments that have already expnded greatly with pre-approved  expansion to take place over next 10 years.

*If you are looking for a partner with his finger on the pulse on the RE market, reach out to me!

Income: The rental rates are $1600, but I will be living there with my brother and tend to stay at my other home with my fiance, and it has already been agreed that he will be paying $1,500 rent for first year, plus power bill, and after that I plan on renting the home for a few years ($1600 a month) while I decide what to do with it. 

Expenses: 

Due to the no money down maneuver I am making, the monthly payments are pretty high, but I don't mind since there is no PMI and it is a nice way to acquire a property without having a ton of cash on hand at the moment.

I still accounted for management despite taking on property management, but only a 3% rate for my efforts. I have time allocated to manage property, but plan on hiring a property manager at year 2 since I foresee future tenants being too much to manage once brother moves from property. 

I am taking care of lawn maintenance, but accounted for $50 month expense for gas and other misc. expenses.

Cap rate is much lower, for now, (4%) because all big expenses are new (2019) and metal roof is brand new and they last forever. 

Maint/ repair is accounted for at 5%.

P&I, Insurance, water, sewer, and trash are accounted for.

The cash flow is only projected at $167 (not Turner's recommended $200 for SF), but I am fine with it since the home is a turnkey property and the numbers and rent rate is low balled on this analyst to expect the worse.

Anyone with experience using VA Loan have any insight on using the benefit to acquire an investment property or any investment property analyzing pointers that can assist me or bring to my attention any mistakes that are being made would be GREATLY appreciated!

First time using VA AND first time using BP Pro Calculator to analyze properties, but so far I enjoy both so far. Calculator isn't as detailed as my typical analyzing, but the method was primitive, time consuming, and chaotic to any other reader beside myself. Thanks BP!

I tried to poke holes in this, but can't seem to. You may want to run the projections for when you increase rent and hire a property manager. They generally ask for 8+%. Also get rates on local gardeners. You may want to pass that buck eventually as well.

These flippers seem to have done a good job. Except for the fact that they painted the interior doors the same color as the walls. What is up with that? Is this a new trend I'm missing out on? And, the double doors weird me out. Does it make a better impression in person?

Matt, thanks for taking a look! I'm not a huge fan of doors, no slab for patio area, and I'll be painting the exterior for obvious reasons. 

I agree further analysis will be needed and I ran the numbers a few different ways, but overall it seems like it'll be a decent property for minimal money down. 

Your comment made me feel more confident so I appreciate it, but spare no constructive criticism.

Ray, I appreciate your time taking a look at analysis and GREATLY appreciate you reaching out in reference to your lender recommendation. 

I messaged you back so you'll definitely be hearing from me tomorrow!