Analysis without all the itemized expenses.

[Katlin H.]

Hello All, What is your work around for your initial analysis of a property when all the expenses are not available? For example purchase price of $324,900 Gross Income:$49200 Expenses: $8000 Net income:$41200 Cap rate: 10.4% I input the expenses into the calculator in a way that divides the $8000 by 12, remove all other landlord expenses except management (10%) and received this result: CF: $1640.44 Exp: 2459.56 CoC ROI: 19.99% Monthly income : $4100 Does this seem right or am I missing a step. I could not input the expenses correctly and separately as I do not have the itemized expenses, only the gross expenses. Thanks in advance, Katlin H

[Curtis Rouse Jr]

@Katlin H. I did a quick anlysis of this deal through the financial model I built and I would defnitely stay away from this deal. As you can see from the below metrics, this deal doesn't produce enough income to substain the expenses and mortgage which leads to the negative cashflow (meaning you will be paying the investment each month). The $8k expenses they reported cannot be anywhere close to the actuals and they are definitely not accounting for some fixed expenese that should be there. This is what I preach on the forums is that the smaller deals sometimes don't produce enough income and those that do can have very tight margins if you happen to go vacant (this will happen). I personally invest in apartments where the main advantage is economies of scale and most importantly income if you run your numbers correctly. Again, this boils down to "your" personal goals and aspirations, just want you to be made aware of both sides of the spectrum.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 5%

Materials: 8% of gross (plug)

Insurance: 30 per door/mthly (plug)

Taxes: $7k (plug - assumed higher in CA)

Management: 8% of gross (plug)

Garbage: $100/mthly (plug)

Misc: $2400 (plug - assumed unaccounted exp)

Capex: 8% (plug)

* I hope this helps and makes sense. The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!