[Calc Review] Help me analyze my first deal

[Susan Tan]

To what extent is this a good deal? Here's the info on this 1,550 square feet fixer upper duplex that I have under contract in Cincinnati, OH with worst & best case estimates:

Current Purchase Price: $99,910. I'm currently negotiating w/ seller to reduce price to between $85k to $90k based on the major rehab costs.

Total rehab costs: $31k get it rent-ready.

Annual prop taxes: 2,237.72

Total rent: Between 1,010 to 1,250 per month for both occupied units, depending on how bad the recession will become later in 2020.

Lawn trim, snow removal, gas, electricity, & water: Tenant pays.

Property management: I assume 10% of rent, so $101 - $125 a month.

NOI per year: $8,670 to $11,262.

Flood insurance: None.

Home insurance: $556/year paid outside of escrow.

CAP rate: 6.46% to 8.6%.

[Evan Polaski]

@Susan Tan, please feel free to reach out, as I live in Cincinnnati, and while I don't invest in College Hill, am happy to help with any specific questions.

I have a duplex in Hyde Park and I pay water.  Not to say you can't charge back, but I only have one meter and just pay it.

Does the management contract include leasing services?  Typically they don't and the 10% is collecting rent and handling calls.  Expect 1 months rent for new leases, and renewals for me in the past were 25% of a month.  I believe some managers try to get a full month on renewals as well, but that should not be the case.

I also found in general my repair costs went up with management companies versus sourcing my own.  Not just because of the tacked on fee, but also because they are not price shopping like you would.

And then, I would also make sure you are reserving adequately for repairs, capex items not hit in rehab, and about 4% vacancy, which assumes one month every other year.