Feedback Request: Practicing Property Assessment

[Account Closed]

Since I'm super new to REI I figured it would be a good idea to start going on Trulia, finding example properties and playing around with numbers in a spreadsheet so I could get some feedback from the community to see what I missed, how far off my assumptions are, and to ask some questions (at the bottom of the post). Constructive feedback is greatly appreciated!

DISCLAIMER: I have no intention of actually buying this property, and anyone looking at this post should take this as a face-value exercise that I did for my own education. 

Here's a link to the spreadsheet: https://docs.google.com/spreadsheets/d/1p1_bi0JjtR...

Property Info

Address: 418 Melvenia St, Indianapolis IN 42619

Assessment From 2015: $47,200

Asking Price: $52,500

Gross Operating Income:

Monthly Rent: $650/mo

Vacancy: -$65/mo (10% of rent)

Total GOI: $585/mo

Operating Expenses:

Real Estate Taxes: -$47/mo (taken from Trulia)

Insurance: -$13/mo (taken from Trulia)

Property Management: -$58.50 (10% of GOI)

Repair Fund: -$58.50 (10% of GOI)

Utilities: $0.00 (utilities in tenant's name)

HVAC Maintenance: -$8.33 ($100 annually)

Accounting / Legal: -41.67 ($500 annually)

Misc: -$12.50 ($150 annually)

Total Operating Expenses: -$239.50/mo

Net Operating Income

$585 GOI - $239.50 Operating Expenses = $345.50/mo

Mortgage

Downpayment: $10,500 (assuming the asking price $52,500 is the purchase price)

Mortgage: $42,000 30 year fixed

Interest Rate: 5% (mortgage calculators default to 3.92% so I bumped it up)

Monthly Payment: -$228/mo

Monthly Profit 

NOI - Mortgage = $117.50 (NOI - Mortgage)

Cap Rate (NOI / Purchase Price)

$4146 Annual NOI / $52,500 Purchase Price = 7.9%

Cash on Cash (Profit / Investment)

$1,410 Annual Profit / $10,500 Downpayment = 13.43%

Questions:

• General feedback? Did I calculate anything incorrectly?
• Where can I find tax info if it's not in the assessor's property card?
• Is there a good way to estimate insurance costs? Are Trulia's estimates reliable?
• How much do you stick aside for repairs? I'll be rolling all of my real estate income back into more investments, but I don't want to be left with too few funds...
• Do you do HVAC maintenance or do you offload that to your tenants? I assume I do so tenants don't forget...
• In Indianapolis is there a need for regular pest control? In FL we used to spray bi-monthly for ants. Again, I assume I would pay for this so the tenant doesn't forget?
• I pulled the accounting / legal number out of thin air; how do you estimate this? I assume this number won't up a lot with every additional property?

[David Faulkner]

A newbie analyzing a property in Indianapolis from SF ... hmm. I understand that this is an exercise, but do you have trustworthy "boots on the ground" in Indy that can validate your numbers for you and manage the purchase, rehab, and rental? By trustworthy, I mean if they found a briefcase on the street with $50k in cash in it and your contact info, are you certain they would contact you to return the money? May sound far fetched, but that is not far off from what you'd be doing investing out of state. If not, then the numbers don't matter. If so, then look at the numbers.