Deal Analysis for a Newbie

[Tim Haenn]

would love anyone's opinion on whether the deal below looks "good" to you....thanks!

OVERVIEW
Listing	109,900
Purchase	106,000
Down Payment	26,500
Closing Costs	12,393
Cash Needed	38,893
Loan Amount	79,500
Annual Taxes	4,444
CASH FLOW
Mo	Annual
Income	1,480	17,760
Unit 1	800	9,600
Unit 2	680	8,160
OpEx	441	5,290
Homeowners	70	840
Vacancy	74	888
Property Management	89	1,066
Maintenance	74	888
CapEx	74	888
Utilities	60	720
NOI	1,039	12,470
Loan	435	5,220
Taxes	370	4,444
Cash Flow	234	2,806
ANNUAL METRICS
Cash on Cash	7.2%
Cap Rate	11.8%
Payback Period (Yrs)	14

[Jason Cory]

Houses don't have cap rates. They have gross rent multipliers. What you're stating at 11.8% is the return on investment not cap rate. A 12% return is trash on a house. Easier terms, it's the 1% rule everyone on BP pushes because it lines the pockets of the Turnkey provider but actually make terrible investments. You should flip a B neighborhood house not rent it. Renting in an owner occupied area immediately brings down the value because people that have the money to buy don't want to live on the street with tenants because they don't cut their grass or care for the property the way an owner does so they go to the neighborhood where it isn't this way, which in turn, makes the owner on the street selling reduce the price to get it sold. 

Principle of Substitution - Walmart & Target have the exact same item. One store has it on sale. Where do you buy the item? 

Same in Real Estate. That's why the buyer went to the other street & why the seller on your street had to put it on sale to get it sold.

Never rent in owner occupied areas.