Analyzing Rental Property Deals SFH

[Marcos A Miranda]

Hello everyone, less than a month new to BP and to RE investment in general. I know there are many variables that might prevent a true constructive feedback but I was hoping to get some insights and guidance from this platform. I'm analyzing a first potential SFH deal on a conventional loan with 20-25% down. After expenses and mortgage, I end up with a net cash flow of anywhere b/w $150-$250 which I find rather small, and I wonder if this could even get eaten up by tax filing time. If I apply the 1% rule, the current rental value is below by about $500, however, cap rate is calculated at 6% and CoC at 3%. (neither cap rate or CoC were calculated using NOI after mortgage costs). I'm hoping I didnt make a mistake with these numbers but assuming proper assessment of the local market, jobs/population growth, property condition, rental demand, future appreciation etc., is this something that sounds within acceptable ranges or am I missing a piece of the puzzle here?

Thanks in advance!

[Simon W.]

Hello @Marcos A Miranda

This sounds about right. A lot of new investors think they would be making a lot of money. It is almost the same mentality of the renters, they think that all landlords are rich lol

You are building equity when doing this. 

Yes, it can get eaten up but only year-end you will truly know if those will get eaten up.

It is important to make sure your books are accurate so when it's time for tax filing, you won't be surprised if you owe or not.