It seems foreign that you're supposed to be able to find deals on MLS, which makes me think I'm missing something here: https://www.biggerpockets.com/analysis/rentals/d8b0ee91-b375-497c-89ed-63e39e429dcd.
I'm able to find 1-2 deals a day similar to this.
I budgeted 10% each for maintenance, vacancy, and capex - which seems like it might even be a little conservative. I plan to self manage and have tenants pay all utilities.
$347/mo in cashflow, 8.5% COC isn't incredible, but it's a fine base hit - right?
Link didn't seem to work, try this instead:
Have you had a chance to walk the property with a contractor to see if there's any rehab that needs to be done? If so, I think your 10% numbers are fair, and as you said, maybe a bit conservative. If you've done your due diligence on taxes, insurance, and the neighborhood (sales comps, rental income, etc.) then I would think this is a solid "base hit."
@Jon Sutton I agree, it's a "fine base hit." You should set parameters for what works for you (e.g. $200/mo cash flow or 12% COC). A lot of investors will shoot for 10-12%+ COC as a minimum. If there's an opportunity for appreciation on this property then you may be able to live with 8.5% COC.
Taxes and insurance seems low, but I'm not familiar with the market.
Your main point is that you can still find deals on the MLS and I completely agree. This one looks like it's already under contract after 4 days on the market, so it might be a very competitive environment
That's similar to my market in Pinellas County, Florida. We have solid 6.5-8.5% cap rates on our market still. It depends on what kind of returns you're looking for as an investor.
Those taxes and insurance numbers are less than half of my market, but you can still cash flow with the "right" numbers.
There are plenty of deals to be found on the MLS or "listed" on other portals. As someone recently said -- they are the definition of motivated sellers if they listed on the market and are paying a commission!
Thanks for the feedback, folks!
I got taxes from the listings on MLS, so those should be correct. I'm making informed guesses on insurance based on my own primary residence insurance rates plus some "non-primary residence cost inflation."
Phoenix is definitely a bit of an appreciation play so cashflowing at 8% is good enough to let me ride that wave. Appreciate the feedback!
The monthly rent you entered seems a bit high for the area and a 1000 sf home, and the list price isn't likely going to be the sales price. It's a multiple-offers-received scenario so it's sure to be a bidding war. The taxes are low because it's in a rougher part of town and Romley St. backs up to a salvage auto yard.
But as you have stated, there are still some deals that pop up here-and-there on the MLS, but a lot of them are artificially priced low in order to drive up interest and create a bidding war.
That is a pretty bad part of town....