Property analysis - too good to be true?

[Dave Grimson]

Hey everyone, i've been analyzing a lot of deals lately and want to get some of your thoughts on this property and my analysis. 

The Property:

2 family property,  864 sqft both units, 1860 yr built

unit 1 is  3 bed 1 bath, and rents for $1275

Unit 2 is 2 bed 1 bath and is not rented

Currently one unit is rented out for $1275 but all utilities included

List Price is $119,000, been on the market for 162 days

I havent been to the property to see it in person but cosmetically the pictures look very good - one unit has some updates (new kitchen and appliances) and the other might need some touch ups but looks well maintained.  Exterior looks 

My analysis:

estimated purchase price of 110,000 with 20% down

Approx 10,000 in repairs

About 37,000 cash needed

2375  Monthly income (1274 for 3 bed and 1100 for 2 bed) - depends if I would continue to let tenants pay utilities or not - this example i'll let tenants pay utilities

2375 -  Monthly expenses 1564 =    $811   Cash flow!!!

Let me know your thoughts, seems too good to be true but maybe I will find repairs after going to look at the property.

Thanks in advance for your feedback

Dave

[Brent Coombs]

I doubt that your Repairs, Cap Ex, and Vacancy will average no more than 18% of its Rent.

More like 25% annualized over time I would expect. Is that being unreasonable?

I reckon if you plug in some more conservative figures, you may end up being pleasantly surprised if the expenses end up being less, and less likely to have a poorer result than allowed for! Cheers...