Analysis Paralysis?

[Laura Gonzalez]

I've got a deal ready to go but I am psyching myself out about it. Can someone knock some sense into me?

I am seriously considering (I have the contract in hand) a 2 flat turnkey property in Chicago that I've been researching for about 3 weeks now. All the numbers make sense; after all expenses, vacancy estimates, taxes, property management, etc, and the mortgage loan is paid, there is cash flow of $400 a month. My ROI is over 18% and the cap rate is about 10%. The properties in the area are gaining value very quickly...but that is just a bonus, it's not included in my plan just in case that doesn't pan out.

I am worried because this would be my first deal, it's far away, and I'd be putting down ALL of my cash. Is this still a good deal if I have less than a hundred bucks at the end of the day?

Thank you,
Laura

[Marco Santarelli]

Hi Laura Gonzalez,

I'm glad to see that you're taking action, but before I fully congratulate you, let me ask you a few questions:

1) When you say, "I'd be putting down ALL of my cash. Is this still a good deal if I have less than a hundred bucks at the end of the day?", are you saying that you will have NO cash reserves? If that's what you're saying then you should take pause. I recommend to all my investor clients that they keep 2 to 3 monhts of cash reserves on the side at all times. You would never run any other business without operating capital, so why would you run your real estate business that way? That's risky to me should something happen.

2) Are you willing to share the address (even via a PM if you don't want to publish it)? I'd be willing to run some neighborhood research for you to provide some feedback on crime rates, amenities, schools/education, rent trends, price trends, future growth potential, etc. (No charge.)

3) Have you 'interviewed' the property manager/company? This is a critical step.

I could think of more, but I will stop there for now.

Continued success!