So much of this is market and investor specific. It could be that these numbers are fantastic in your market. Some utilities can be leined against the property, and it's different in every market. You should be paying those specific utilities and adjust your rents accordingly.
Don't let anyone else tell you what is or is not a good deal. Do the numbers work for your personal financial situation and goals? Is this a good deal in your market? My guess is you already know the answers to these questions, and if you don't, find a mentor or a realtor who can help you get a solid understanding of your market so you will know immediately when you see a good one.
Best of luck!
Although I agree with the general message that every deal is unique, I believe the whole point of this forum is specifically to advise BP members if those deals have potential or not. A loss-making, cash-bleeding property is rarely good for anyone..
Based on the report, he's buying a property for $200k that will generate $1,350 monthly income so we're already starting pretty low. Then even using low expense estimates (5% vacancy, 5% capex, 5% repair, no property management, etc), you cashflow $90 a month, for a 3% Coc and 5% cap rate. The IRR is not calculated by the model but it's probably not amazing either.
Overall, if I'm going to manage a tenant and leverage myself with debt, I would at least expect a decent return on investment, otherwise I would invest somewhere else. In this case, I'm not sure the property can make the cut at this price.
@Dallas Easter you shouldn't pay utilities for sfh and your capex is low. I use a minimum of 10%. Your vacancy numbers are one turnover every 20 months . I use 85 or 1 turnover every 12 months.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
6y
So much of this is market and investor specific. It could be that these numbers are fantastic in your market. Some utilities can be leined against the property, and it's different in every market. You should be paying those specific utilities and adjust your rents accordingly.
Don't let anyone else tell you what is or is not a good deal. Do the numbers work for your personal financial situation and goals? Is this a good deal in your market? My guess is you already know the answers to these questions, and if you don't, find a mentor or a realtor who can help you get a solid understanding of your market so you will know immediately when you see a good one.
So much of this is market and investor specific. It could be that these numbers are fantastic in your market. Some utilities can be leined against the property, and it's different in every market. You should be paying those specific utilities and adjust your rents accordingly.
Don't let anyone else tell you what is or is not a good deal. Do the numbers work for your personal financial situation and goals? Is this a good deal in your market? My guess is you already know the answers to these questions, and if you don't, find a mentor or a realtor who can help you get a solid understanding of your market so you will know immediately when you see a good one.
Best of luck!
Although I agree with the general message that every deal is unique, I believe the whole point of this forum is specifically to advise BP members if those deals have potential or not. A loss-making, cash-bleeding property is rarely good for anyone..
Based on the report, he's buying a property for $200k that will generate $1,350 monthly income so we're already starting pretty low. Then even using low expense estimates (5% vacancy, 5% capex, 5% repair, no property management, etc), you cashflow $90 a month, for a 3% Coc and 5% cap rate. The IRR is not calculated by the model but it's probably not amazing either.
Overall, if I'm going to manage a tenant and leverage myself with debt, I would at least expect a decent return on investment, otherwise I would invest somewhere else. In this case, I'm not sure the property can make the cut at this price.
Rental Property Investor · Dallas, TX · Member since 2019 · 30 posts · 12 votes
6y
This deal is too lean even without property management included in your analysis, from those numbers you'll like be cashflow negative within a few months.
Consider renting out each room if your market supports it, That could raise how much you get in rent each month but expect to be more involved if you're not using a property manager.