First Real Estate Investment - Out of State - Analysis

[Corey Chambers]

Hello all,

I am new to the Bigger Pockets forums, however have been listening to podcasts to and from work for months. I am a commercial credit underwriter for a mid-size bank so I have a good understanding of real estate analysis.

I currently live in South Florida and originally wanted to use an FHA loan to buy a duplex or triplex to house hack, however the South Florida real estate market has not been easy finding cash flowing properties. I am also afraid of the rapid appreciation of homes relative to median incomes in the area and current economic conditions. Therefore, after listening to various investors on the podcasts I decided to look out of state. This leads to me to the deal I found.

Property Details:

• Listed Price: $265,000
• Proposed Offer Price: $215,000
• Separate duplex and triplex next to each other
• All units are 2/1's; Property located in Tennessee
• 100% occupied with long term tenants in place
• The deal also includes an adjacent vacant commercial property that is zoned for multifamily construction

Cash Flow Analysis

Gross Rents:              $33,000

EGI (5% Vacancy):     $31,150

Oper. Exp. (35%*):      ($10,973)

NOI $20,378

Debt Service**:           $17,071

Excess Cash Flow:     $3,307

DSCR: $1.19x

*Operating expense ratio of 35% used to be conservative - most likely lower

** Based on 30-year amortization at 5.00% at the full asking price of $265,000

Financing (Where I Need Help)

• I have relatively little cash and was wondering if hard money would be attainable depending on the negotiated price and ARV
• If hard money is not a reasonable option, I was thinking about finding a partner or possibly private lending. 
• I plan on eventually doing a BRRRR on this property to refinance out of the hard money or private lending.
• What are the obstacles I should plan on facing when trying to find financing? Obviously little liquidity isn't much help.
• Any advice is much appreciated!

As per the borrower:

• All of the tenants have had a background and credit check completed. 
• The units have been remodeled within the last five years, including a new roof on the duplex.

Thank you for anyone who took the time to read this and any ideas of advice is strongly appreciated!

I look forward to joining the Bigger Pockets forum community.