Basic SFR Deal Thoughts

2 Replies

Hi, wanted some other eyes on a potential deal. I go to check it out tomorrow and; if all looks good, would likely put an offer on it. 

In my KY market. 

  • $45,000. Comps anywhere from $38-60. 
    All major mechanicals replaced. Roof fixed. 
    C class. Not much on the appreciation front for the area. 
    After PMTI, property management, and saving for vacancy, Capex, maintenance (additional 34% of rents set aside for all those) should net around $150/mo.
    Commercial loan able to get 3% w/20% down 5/1 arm amortized over 20 years. 
    Mostly ready to rent. Will probably put $5k in to replace some flooring, maybe some paint, etc. 
  • Will have a financing and inspection clause to cover me. 

  • Thoughts? Am i missing anything? How’s it look? Goal is just long term cash flow and wealth. 

    @Michael Branch I would suggest using the rental property calculator on the BP site. That way you can see it all laid out better. Overall, it is tough to sit here and give you advice on what would work best for you since that depends on a lot of factors. I would think the 34% for all expenses seems low though.

    I would ask yourself these questions though.

    Does it work for your buying criteria and your long-term goals is the main thing?
    Do you have a good team and especially the PM in place?
    Do you have an exit strategy if need be?

    James,

    Thanks for the reply!

    I do have a spreadsheet I’ve built where I’ve tried to capture everything. Just laid it out that way for the sake of the post. I’ve done a few (traditional, not brrrr) deals in the past and have a PM, lender, and Realtor. I’ve never done any flooring but my brother is a contractor. 

    To clarify the 34% was not including PMTI. It was 10% maintenance, 10% Capex, 9% property management, 5% vacancy.

    I guess I was just asking about the cash flow. I know it’s relative. All in it’ll be a bit over $17k for down payment , flooring, holding costs. 

    Criteria for me is B and C class. Lower price point that allows affordability but still cash flow. Hoping to one day transition out into B class. Unfortunately I haven’t really delved deeper than that. 

    Exit is a sale. Market in general very hot so after the cosmetic changes I don’t think it’ll be a tough sale. 

    Likely just second guessing myself 😅 Need some motivation or outlook from you experts! Lol