[Calc Review] Help me analyze this deal - Philadelphia Triplex

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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
7y

@Mark Andrade a lot of red flags here...

1) you're paying $2k over the ARV, and then spending $50k more in closing and repairs? That seems off.

2) Are you living in the property? If not, your downpayment is way too low. Should be 20% minimum

3) capex is too low, should be $200-300/mo

4) Maintenance is too low. Should about match capex.

5) management is too low. Dont forget they'll likely charge a one month placement fee, so I would bump that by 50%

6) I would double check those taxes. $400/yr in philly? Seems very low.

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  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    Nice report. Looks like a nice cash flow deal. I don't see this area appreciating significantly over the next few years so I like how you used a conservative ARV.

    How much renovation does 45k buy you on 3 units. Probably not full gut jobs, so I'd budget a little more for repairs if I were you. And hopefully by doing the right upgrades up front you will be able to keep capex under control.

    1Reply
  • Mark Andrade
    OP
    Real Estate Agent · Philadelphia · Member since 2018 · 6 posts · 1 vote
    7y

    Thank Max I appreciate it! I am starting out still not sure how much would be needed. What would you say the cost if per unit and if you happen to have a system or process for estimating repairs? Thanks again!

    0Reply
  • David RobertsonBusiness Member
    Flipper/Rehabber · Kansas City, MO · Member since 2010 · 755 posts · 778 votes
    7y

    Hi Mark,

    Have you walked through the property to see the condition?  If not, it's really just a shot in the dark, and as Max said, $45k isn't going to cover much on 3 units.  I would imagine $45k would only cover a light remodel for each unit (new paint, new flooring, new light fixtures).

    To estimate costs accurately you should really be walking the property and creating a detailed list of the repairs and costs for each item.

    I would recommend getting The Book on Estimating Rehab Costs to help you learn the basics.

    I have a spreadsheet in my fileplace that may be helpful as well:

    https://www.biggerpockets.com/files/user/drobertson/file/house-flipping-spreadsheet-6-lite

    FlipperForce
    WebsiteView Page
    1Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Youbsurevabout those taxes

    1Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y

    @Mark Andrade a lot of red flags here...

    1) you're paying $2k over the ARV, and then spending $50k more in closing and repairs? That seems off.

    2) Are you living in the property? If not, your downpayment is way too low. Should be 20% minimum

    3) capex is too low, should be $200-300/mo

    4) Maintenance is too low. Should about match capex.

    5) management is too low. Dont forget they'll likely charge a one month placement fee, so I would bump that by 50%

    6) I would double check those taxes. $400/yr in philly? Seems very low.

    1Reply
  • Mayer M.
    Investor · Cherry Hill, NJ · Member since 2016 · 860 posts · 324 votes
    7y

    @Mark Andrade

    I believe I know this property. The wholesaler has been trying to sell it for a little while now and it’s had a few price drops. Additionally, I believe it’s zoned single-family,

    Not multi family

    1Reply
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