Poke holes in my analysis

[Johnathan Robinson]

I’ve got a prospective property in my sights with the following data included below. On first glance, it looks like a property I should pursue; however, I’m a newbie and probably should seek the counsel of the more wise BP community. Please let me know if you think I’m underestimating my analysis.

Here are my data points:

Asking Price $175,000

2 br/1 ba duplex in a decent part of town in Houston, TX

Rental comps range $950-$1,095/mo

Current tenants lease runs through December

Purchase Price: $175,000

ARV: Assuming the place is in decent condition, I don't plan to make any substantial improvements. So I assumed the ARV would be $175,000

Estimated Repair Cost: $2,500

Downpayment: 10%

Loan Interest Rate: 4.5%; pulled it out of the air. My credit is 750+

Loan Amortization: 30 years

Gross Rent: $2,190 ($1095 *2)

PMI: $65 estimated

Monthly Insurance: $65/mo estimated

Property Tax: $229/mo

No other fixed landlord-paid expenses (e.g., elec, water/sewer). Should I include something for garbage? I have no knowledge of how that works.

Vacancy (10%)

Repairs & Maintenance (5%)

CapEx (6%)

Management Fees (0%)- I’ll be learning from this property, but hope to handle management alone.

Future Assumptions: Ultra Conservative

Annual Income Growth: 1%

Annual PV Growth: 1%

Annual Expense Growth: 1%

This results in $573 in net cash flow per month, which sounds good. Let me know what you think.

[Chris Matson]

At first blush, I’d relook your Property tax number. It seems low to me. You can go to Harris County Appraisal Districts website and see what that number is.

Good luck with your first buy.