All Forum Posts by: David Duong

Hi everyone,

I would truly appreciate it if someone could analyze my numbers to see if this property is a winner. I’m considering making my first offer; this is my first Single Family property analysis. My RE strategy is to buy and hold (become a landlord).

Tax appraisal is $124,000
Listing: $90,000 (short sell listing price by bank)
Purchase price: 84,000 (I believe I can get it for this price)
Down: 20%
Finance: $67,200
Rate: 5.1 (30 year)
Closing cost: $5,000
Total cash outlay: $23,800

Monthly rent: $1,100 (Real estate agent tells me that this is very accurate)

Monthly P&I: $366
Monthly Hazzard Insurance: 1000/12 = $83.34
Monthly RE taxes: 3400/12 = 283.34
Estimated monthly Maintenance & Repair: $50
Estimated monthly misc. cost: $50 (such as vacancy)

Total monthly cost: $832.60

My monthly positive cash flow is $267. I was telling my wife that if we purchased the property at $84,000, we would have instantly equity of at least $30,000. More importantly, we have positive cash flow of $267 coming in each month (assuming no vacancy and maintenance & repair remain stable).

Property is in a decent neighborhood. Stable local economy.

Am I missing anything? Is my analysis flawed? This seems like a winner to me. Completely new to RE and any insight or guidance will really help me. Thanks.

Thank you again. That was very informative. Just in two chats, learned more than a weeks worth of reading. Nothing beats real experience and from learning other investors sharing real experiences.

J Scott,

Thank you again - that makes perfect sense. May I please ask you 4 more questions:

1. On your spreadsheet example, expenses were 45% of gross income. Is what people on this blog referred to when they state rental property expenses should be less than 50% or I believe they say something similar.

2. Can you please verify that mortgage and interest is never to be calculated in NOI?

3. If you don't mean, please... can you explain the cash rate of return and the total return of return. I really would like to get a better understanding.

4. Finally, is there a simple ratio or rule of thumb to determine if a rental property is a good investment. For example, if cash ROI is x, then it's a good investment.

Thank you very much. Can you pleae tell me what is the vacancy rate percentage means in the spreadsheet. For each month, I see 8% and for each year, I see either 8% or 7%. Sorry if it's a basic question (newbie).