$300 Pure Cash Flow & Inf. Returns with a $35k House!

[Reagan Huefner]

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*This link comes directly from our calculators.

This deal seems almost too good to be true, but numbers don’t lie! The only question is, are these numbers reasonable? Would love any advice on this Jacksonville North Carolina deal.

[Steve K.]

@Reagan Huefner Your rent to purchase price is good, but repairs and capex combined at only $1620/yr. is not a reasonable budget IMHO. Instead of using percentages, I’d create an actual capex and maintenance budget for the specific property instead. Add up all the items you expect to encounter during your hold period (determined by looking at expected remaining life of roof, furnace/HVAC, hot water heater, floors, landscaping, appliances, driveway, components (windows, doors, garage door etc.)). Forecast which ones you’ll likely have to replace during your ownership, and divide that number by the number of months in your hold period. $1600/yr. is simply nowhere near enough to maintain a typical home, so think about that and make sure your total numbers make sense. 

Vacancy is another area where using percentages of a low rent number may not result in a realistic number for the minimum operational expenses involved in running a rental. 5%/$45/mo. is only$540/yr. That's only around two weeks of vacancy per year. That's cutting it close. You'll need money for turnover costs somewhere in this calculation as well. 

I think Capex, repairs and vacancy are going to eat up all your profits on this one unfortunately, as there is just not enough gross rent here to keep up with the expenses involved with maintaining a property.