Deal Or No Deal

[Reginald Dave]

Hi Everyone : Newbie Here Asking a question .I found a single family home. This is what I got so far. Just wanting to know your thoughts. House needs about 5k in upgrades to be rented out. Does this look like a Deal Or No Deal ? This would be my first investment property.

3 Bed / 2 Bath, 1654 Square Feet

$82,680

Cash Flow: $6,030 /yr
Cap Rate: 12.23% /yr
Cash on Cash: 33.15%
Gross Yield: 18.14%

[Daren H.]

This is why I don't like rules of thumb like the 50% rule to seriously analyze a property. Yeah, it might be good to use for a sanity check to see if further investigation is even needed. In this example, I could easily see the operating expenses being ~$125 a month less in my area which dramatically increases your return. You need dig into the details and look at the operating expenses closer. Taxes, insurance, property management, leasing fees are all relatively easy information to get that can be accurate. If you are near buying, you need the hard core information, not rules of thumb. Depending on location, a lot of people would take $90K all in for $1350 rent all freak'n day.