[Calc Review] Help me analyze this deal

5 Replies

Hey Ryan, 

Per my agent, since we are using cash he said the closing costs should be very minimal, around $1,000. We were supposed to see the property today but will have to wait tomorrow. So far the estimate for a minor rehab is 10-12k to bring the the property ARV to around:115-120k. It's not a homerun but we are looking to just do some conservative, base hits, so we can get a better feel for the people we currently work with and the market over in that area. If it does not flip for what we want then we plan to place a tenant in the property and do a cash out refinance to pay back our investors. I appreciate your input and welcome anything else you got.

Jake

New investor question, so apologies if this is an amateur question. But, why would you sink that much capital into the investment instead of doing 20% DP with a loan? I understand some people prefer to do business that way, just curious is all. 

I would definitely play around with the calculators unless this deal meets your parameters. The CoC seems low but I'm still new to all of this myself. To Dakota's point, your CoC return would be much higher if you used leverage (20-25% down); you'd decrease your monthly cashflow but you have a healthy gap there to work with. That and rent to purchase is just under 1%. @Jacob Trimble I can see this definitely as a buy and hold and it will move you forward; it doesn't have to be perfect. I'm here in Honolulu and I'm curious to see how this turns out.

Hey, 

Just giving an update. We found that the property needed more repairs than expected. We asked them to come down to 67k however, they declined the request and we backed out of the deal before the inspection period was over. Overall, good learning experience. Moving onto the next one.