Need CRE Analysis Help | Boulder Student

[Noah Harms]

Again, I am trying to practice and run some numbers on potential investments and would like help since I am just starting to learn the games of real estate and underwriting deals. Any criticism or suggestions are appreciated. I will provide a PDF and some screenshots. This property is a 15-bed 6-bath home in Boulder CO. It is currently 100% occupancy and has 17 people living in it. The rent numbers are 100% accurate.  Both purchase price taxes and expenses could be disputed as higher or lower though I think they are pretty reasonable. One set of screenshots is from an Excel template the other is a biggerpockets calculator. Let me know what you think! (I would be crowed funding for this deal FYI.)

[Dave Meyer]

Hi Noah -- interesting deal here. A few things stood out to me on your analysis you may want to consider. 

1. Maintenance costs. $225/month seems dramatically low. Even for a well-maintained SFR I would personally think more like $300-400/month, but a house with 17 people living in it there's going to be way more wear and tear. I obviously haven't seen the condition of this property, but just gut-check I'd have a hard time believing anything under $500/month. This is particularly true because you don't have turnover expenses in there either -- which you will need. I would seriously reconsider this input to your analysis.

2. I agree with Rene about insurance seeming a bit low -- but you can easily get a quote from a broker and verify that. The more concerning thing to me is that you've modeled insurance costs as fixed. They don't change for 30 years? Insurance costs are going up rapidly, and even in 'normal' times you need for forecast your expenses going up. 

3. Vacancy allowance of 0%?  You need for forecast and plan for vacancy. Planning for things to go perfectly is a bad idea IMO. 

4. 4% appreciation is a bit aggressive if you want to be a more conservative type of investor. I personally wouldn't go above the historical rate of inflation (closer to 3%), and always underwrite my deals as 2%.