What's a good cash-on-cash for a turn key rental in Spokane, WA

[Account Closed]

Hello,

As a first time investor I'm looking for a turnkey rental in Spokane, WA that is pretty solid and in good condition so that I can get cash flow going ASAP. Because of my situation I'm looking to invest in cash and then refinance later to leverage equity for future rentals.

My budget is in the $100-150k range and I'm looking primarily at 2-4plexes on the assumption that single family in my price range wouldn't cash flow as well.  Maybe in future investments I'll have more time to dedicate to upgrading.

I have put together a proforma worksheet for a sample property. I am posting it here in the hopes that you can help me review it for any problems or insights that I didn't consider.

Do you see any issues and do you think the resulting numbers look good in this sample considering the Spokane, WA market? I wonder if I should shoot for a higher cap... or a better question would be what's a good cap rate to shoot for in the current market in spokane for something fairly turnkey in my budget? 

Since I am looking to refinance in the near future I put the financing to 30% down. There doesn't seem to be much cash flow. I wonder if my numbers are too conservative or not for repairs, capex, vacancy, etc. 

Thanks in advance for your input!

[Scott Ellis]

The GRM was one of three ways our appraiser valued our property. The other two included looking at recent comparable sales and taking a "cost" approach of what it would cost to build the same house today on bare land. What seemed crazy to me is that all three approaches came in within $5K of each other.

I agree with what @Sam B. said about local vs. remote, but will also stress that there are sooo many ways to get creative with real estate investing and that each situation is different. My wife and I are doing an FHA 203k loan on our triplex. This means we have to live in it for a year, but we only have to put 3.5% down. The triplex actually doesn't cash flow well (about $140 a month after a 10% mgmt fee or under $50 per door) but because we have so little out of pocket, our cash on cash return is still very high. For us there is another benefit. We intentionally did a high rehab loan which hurt our monthly cash flow because it brought up the monthly payment. However the loan has about $30k set aside as a contingency reserve. If that doesn't get used during our rehab, we get in the form of a check which we can use to pay back our down payment and fund our next deal.

I bring this up for two reasons. 1) If 10% CCR is your criteria, let's keep analyzing deals and thinking creatively until we find one that works; and 2) Every deal is different. We're in a sweet deal right now which you'd never qualify for without living here, but your reserve of cash can open up deals for you that many of us could never get our hands on.  

I'd recommend hopping on Zillow and trying to analyze a couple of houses every day.  I sent you my sheet which makes it pretty quick and before long you'll notice certain houses that are better deals than others.  Then, it's just a matter of being ready to strike when you see that deal come up where the numbers make sense.