Looking for that first deal

[Anthony Whitt]

Hi all! I'm here in Dayton, OH looking for my first deal for a buy and hold for cash flow. Because I'm new at this, I don't yet have a lot of contacts, so I've been browsing the MLS looking for properties that could fit my criteria. Here's what I'm looking at:

1.  Estimate gross scheduled rent minus a 10% avg vacancy and assume 50% operating costs for fewer unit properties (2-4), 55% for 5-9 units and 60% for 10+

2. Taking that NOI and backing into a 9% cap rate (which seems reasonable but a little on the higher end for this market) and seeing how that number compares to asking price.

* I also look at the 2% rule to kind of verify and amazingly anything that hits 2% looks on the surface like a killer deal

3.  Finally I look at 100% financing at 6% over 30 years and see if the property could still cash flow $100/door per month (not that I would necessarily do 100% financing, but I'm checking to see if it can support it.

4. This is where I then take that list and send it to my agents to pull actual numbers from the listing agent.

Sorry the email is so long, but I'd love some feedback on this to see if you think I'm on the right track so far. Thanks in advance!

Tony