My First Trial Run on a property. Testing the Numbers.

[Brandon Duff]

Property is $179,000 for a 5 Bedroom Multi-Family home. 

They said the total income is $2075 for rents ( Based on a site) 

$2075 * 50% Rule = $1037.5 

20% of 179,000 is 143,200 @ 4% interest Rate makes the Mortgage $683.33

( No PMI or Property Tax because thats part of the 50% correct?)

Cashflow = $1037.5 - Mortgage

$1037.5 - 683.33 = $354.17 Cashflow

( Brandon in his 50% Video he said he likes $100 - $200 per Rental so that doesn't seem that great which is $70 per Bedroom)

CoC ROI

CashFlow * Annual /Investment = CoC

$4250 / (  20 % Downpayment + Rehab) 

How do I find rehab needed without visiting a unit or Estimate ( Unit is out of state)

Lets say it needs $10,000 of Rehab

$4250 / $45800 = 9% CoC Return

Which is just below Stock Market.. 

BUT Brandon also said that you should ALWAYS ask for 20% below Listing Value 

Lets redo the Numbers.

Property is $143,200 

Rents $2075

New Mortgage $546.93

$1037 - $546 = $491.5 

Cashflow  = $491.5 

Closer to 100$ per Unit.

Annual Cash flow $5,898 / Investment ( Downpayment + Rehab 10,000 ) $38,640

CoC Return 15%

Very good Return..

Biggest Concerns : 

How do I find out what Rents really should be?

How do I figure out what Rehab should before I hire inspector to figure out if its even worth my time to consider a property. 

Are my Calculations correct? 

[Brandon Duff]

Thanks Dave, 

Great post.. I need to do a lot more research.. I thought I knew a little but this goes to show me, I am barely on the tip of the iceberg... 

Practice makes perfect