Practical Example of Deal Calculations Before Submitting an Offer

[Shane Bracewell]

Hey all!

My name is Shane and I am an Alaska resident interested in buy-and-hold investing ideally in an area that meets the 1% rule (or 0.8%) in an emerging market with potential for appreciation. I hope to use the expertise found on BiggerPockets to learn the process of OOS investing, as this is new to me. So far, I have only read a few RE books and BP articles, and I intend on using the insight from David Greene in his Long Distance RE Investing book to begin this journey. 

My criteria is ~$100k SFH in a B-/C+ class area that will cash flow ~$250-350 after operational expenses, taxes, debt service, and property management with Cap Rate ~9% and CoC ROI 15-20%. I would like to use conventional financing with a 20% down payment. I do not mind adding cosmetic rehab to the property if it will build in equity, but I understand I will need to build a team beforehand to make this work.

I want to use a real life property on the MLS to serve as a practical example for evaluating a property as a buy-and-hold investment. The example house is listed here:

https://www.redfin.com/IN/Indianapolis/4030-Moline-Dr-46221/home/67089523

I am hoping that someone could walk me through the calculations for assessing if this is a good deal. What is your "back of the napkin" math that would help you decide if you should submit an offer? What would your offer need to be to make this a good deal? Would you rehab the property at all?

Any and all help is greatly appreciated.