Looking to analyze this condo deal.

[Kwame Darko]

Hello BP,

I need help analyzing this deal. This is a foreclosed condo.

2 bedroom, 1 bath 924 sq ft condo

Purchase price: $65,000

Estimated repairs: $14580 ($15 sq ft estimate) for carpet, paint, kitchen, light fixtures.

ARV = ~$100000 - 110000 (Based on what the same condos sold for recently)

20% down payment at 4.5% over 30 years.

Property taxes ~$2700 per year

HOA = $161 per month

Rent = $1200

Expenses = 7% vacancy, 8% cap ex, 8% repairs, 10% property management, ~ $70 for water and sewer and I assumed the HOA pays for garbage. I would have the tenant pay for electricity, heat and gas.

Monthly expenses are calculated at $1,174.01 leaving me with $25.99 in cash flow, 3.28% pro forma cap, 0.92% COCROI and 5.04%. 50% and 2% rule says this is a good. Also, the gain in equity says this is a good deal but based on the return it isn’t. Is there another way to look at this and am I over estimating my expenses. I will be managing the property myself but I like to look at everything as if I weren’t. Any other feedback would be nice!

Thanks,

Kwame