# [Calc Review] Help me analyze this deal

6 Replies

View report

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

Looking for to purchase my second investment property (I currently have a 4 plex).  Would appreciate any help with this analysis & whether you think it justifies that large of a down payment?

@Dan Wentworth how did you come up with \$200 per month capex? My capex budget includes but not limited to: roof 25 year life span, floors 10 year life span unless carpet then 5 years, appliances and hot water heater 12 year life span, hvac 20 year life span, bath and kitchen remodel 20 year life span. Assume 800 sf of flooring per unit. In my area it is \$6 sf to replace. \$4800*6 units=\$28600/10 years/12 months in a year=\$240 per month for 1 item in a capex budget. You have 6 sets of appliances, 3 roofs, etc. I use a minimum of 10% as a capex budget. Capex is the most underestimated expense investors make.

@Tim Herman

Interesting point Tim.  I just used the BP calculator to come up with the #'s.  Maybe that is a per unit amount or maybe I did something wrong.  This calculator thing is pretty new to me. I guess I need to come up with my own way of calculating so I can confirm & view the deal from multiple angles. Thank you for the information, it has helped me a great deal to understand & evaluate the numbers better.

@Tim Herman   Not sure if first reply tagged you properly since it didn't highlight your name so here it goes again.  If this is a duplicate to you, I apologize in advance.

Interesting point Tim. I just used the BP calculator to come up with the #'s. Maybe that is a per unit amount or maybe I did something wrong. This calculator thing is pretty new to me. I guess I need to come up with my own way of calculating so I can confirm & view the deal from multiple angles. Thank you for the information, it has helped me a great deal to understand & evaluate the numbers better.

@Dan Wentworth most people pick a % to use when in reality it should be a monthly amount. For analysing purposes I use 10%. Let's analyse the capex logically. This property you are looking has 3 duplexes so 3 roofs. Assume 1 is brand new. Assume it costs \$7500/25 life span/12 months in a year=\$25 per month for a brand new roof. Roof 2 is 10 years old so only 15 years life span left. \$7500/15/12=\$41.67 per month. Roof 3 is 5 years left. \$7500/5/12=\$125 per month. When I buy I pour all excess cash into a reserve account until I have at least 1 1/2 times my most expensive capex. I then save the other money for a down payment. Whenever you tap into the reserve you replenish it until it is back. Depending on how deep you want to explore capex there is a spreadsheet in the files section by @ sam tato.

@Dan Wentworth No property management expense?

@Nick

@Nick Peters   yeah, was thinking about that & will need to add that as I don’t work for free, lol