[Potential First Deal] Help me Analyze this Turnkey SFH Rental

[Brian Boodoosingh]

Hi All,

I think I've found a deal on a SFH in North Carolina. Would love a second set of eyes on the math to see if anyone can poke holes in it for any considerations I'm missing for a buy & hold strategy.

• Purchase Price: $70,000
• Mortgage Terms: 20% down ($14,000) @ 4.5% interest
• Closing Costs: $3,000

• Income
• Average Rent for comps: $850/ month ($10,200 annual)
• Assumptions
• Vacancy: 6.5%
• Management Fees: 10%
• Expenses
• Mortgage: $283/month
  
• Vacancy: $55/month
• Management: $79/month
• Property Tax: $83/month
• Other Misc Expense (including insurance): $250/month

I have this deal cash flowing ~ $100/month. Given that I'm planning to hold this property for a few years with cash flow being my primary goal, can anyone take a look and let me know their thoughts?

[Daniel Haberkost]

Originally posted by @Brian Boodoosingh:

Hi All,

I think I've found a deal on a SFH in North Carolina. Would love a second set of eyes on the math to see if anyone can poke holes in it for any considerations I'm missing for a buy & hold strategy.

• Purchase Price: $70,000
• Mortgage Terms: 20% down ($14,000) @ 4.5% interest
• Closing Costs: $3,000

• Income
• Average Rent for comps: $850/ month ($10,200 annual)
• Assumptions
• Vacancy: 6.5%
• Management Fees: 10%
• Expenses
• Mortgage: $283/month
  
• Vacancy: $55/month
• Management: $79/month
• Property Tax: $83/month
• Other Misc Expense (including insurance): $250/month

I have this deal cash flowing ~ $100/month. Given that I'm planning to hold this property for a few years with cash flow being my primary goal, can anyone take a look and let me know their thoughts?

Hey Brian, what about repairs & maintenance and capital expenditures? If it's a $70,000 house on the east side of the U.S. I would bet it's fairly old as well, so I would be budgeting 8-10% a month for each of those as well. What about landscaping? Are you cutting the grass? It certainly doesn't look like that's encompassed in your monthly management fee. 

Do you have any extra cash on hand? If the furnace goes out in month one will you be able to afford it (this just happened to me)?