Would YOU consider this a good deal on a Buy and Hold property??

Question

Need help investors that buy and hold properties. Would you consider this a good deal?

List Price- $750,000

2 Units- Each 3 bedroom 1 bathroom with 5 parking spaces

Potential Rental Income:	$90,000

Less Vacancy Rate:	0%

Effective Rental Income:	$90,000Gross Operating Income: $90,000Property Taxes: $1,911.19Building Insurance:	$1,200Utilities: $3,600	Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Gross Operating Income: $90,000Property Taxes: $1,911.19Building Insurance:	$1,200Utilities: $3,600	Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Property Taxes: $1,911.19Building Insurance:	$1,200Utilities: $3,600	Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Building Insurance:	$1,200Utilities: $3,600	Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Utilities: $3,600	Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Total Operating Expense: $6,711.19Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Net Operating Income: $83,288.81Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Cap Rate: 11.11Gross Rent Mult.: 8.33To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Gross Rent Mult.: 8.33

To me, it looks like a great deal with net operating income being $83,288.81. But I am new and still learning on what to look for to make it a good deal. Or am I WAY off??

Melissa Harris · Answer

@Doug Emerson I certainaly do see your aspect of this deal. I like the way you approach it and how you figure if it is a good deal for you or not. I need to do a little more homework on this one and start running those numbers. Thanks again for the advice!

Melissa Harris · Answer

@Jerry Evans great advice. I didn't think about that. So in this case, would the net operating income be what I would net after all expenses? If so, is that $83,000 a good number?

Doug Emerson · Answer

I keep things pretty simple personally.  I divide everything out by the month, I also subtract average maintenance costs estimates, property manager costs and an allowance for vacancy (it will happen).  So I get my monthly net profit.  Then figure out how many months until I get my money back (the original down payment, closing costs, remodel costs if any).  To me the ROI (and many other calculations) is just a way of comparing one deal to another and over time I've come up with my baseline based on experience.  In my area, in my niche, I'm getting my money back in about 2.5 - 3 years.  That might be great compared to some markets but poor to others.  So for me its hard to know if you personally have a good deal posted here without having anything to compare it to.  Since you're getting started, and have nothing to compare, ask yourself these questions:  "Am I happy to spend $xx,xxx so I can make $xxxx per month?"  also  "Can I afford the worst case scenario of 100% vacancy and repairs?  (like is there equity to borrow against for repairs and get it rented asap)  Another thing to keep in mind... is that this might be an above average deal but will it prevent you from taking advantage of a terrific deal 4 weeks from now because you stuck all your resources into the first deal.  ...Its a balancing act, with no right answer and that's why its fun.  If you're happy to spend $x to make $x per month, then it must be a good deal for you.  (also make sure there isn't any hidden surprises on the property, my local Code Enforcement department, Planning and Development department...  have been extremely helpful to me, and very friendly people)

Melissa Harris · Answer

So would that net operating income include all of those besides the property managerment fee?