First theoretical purchase - tell me I'm crazy.

[Aaron K.]

Jumping right in here, I have a theoretical purchase I'd like some input on. This is actually a real piece of property near me so the numbers are accurate to that particular property.

Purchase: $250,000
Cash to close: $48,750 (15% down at 5%, owner financing)

Monthly Rent (one commercial space, one residential home, one studio-sized residence, 1 garage): $5000

Monthly:
Tax: 1666
Insurance: 250
Vacancy (10%): 500
Repairs (5%): 250
TOTAL: $2666

NOI (5000-2666): 2334

Mortgage: 1141

Total Cashflow: $1193
CAP rate: 5.7%
Cash on Cash: 29%

I can also put my own business in the commercial space for $2500 of that $5000, which would raise the occupancy rate slightly.

Any thoughts on all of this would be great! I feel that the cap rate is low but cash on cash is good and high with the mortgage terms listed.

The other option is to put 50% down. This would raise the cap rate to 7.9% and lower the COC to 14%. Cashflow after everything in that instance would be $1663/month.