Newbie Faulty Analysis, Please Help!

[Jerry Ologh]

Hello guys!

        I am quite new to real estate investing with nothing but my primary residence under my belt, so I need some insight as to what I may be doing incorrectly. I am looking at this duplex in Arlington Tx,  and hoping to make an offer soon. I have run my numbers, but feel as though I may be overestimating/underestimating hence the negative cash flow. Can you please review my analysis, and suggest what I may be doing incorrectly? What will be a good offer for this property for a cash flow of at least $5000 per annum.

 Thanks.

Asking price = 249,000

Total Annual income = 29400

Estimated Taxes = 5496

Estimated Insurance = 2340

Capex = 7% (2058)

Repairs = 7% (2058)

Vacancy = 7% (2058)

Property Mgt = 10% (2940)

25% down payment (62250)

Annual P & I = 1064 x 12 = 12768

29400 - [ 5496 + 2340 + 2058 + 2058 + 2058 + 2940 + 12768 ]

= 29400 - 29718

Cash flow =  - 318

    All suggestions and corrections welcome! Thanks!

[Rob Gillespie]

Run, Don't walk. LOL!

Joking Jerry!

Seriously though. I am in the Cleveland Ohio market where you can get that same rent off of a 50k property. 

a quick way to analyze a deal is to take gross annual rent cut it in half and that is the NOI. (Net operating income). Then divide that by purchase price to get the ROI or CAP rate.

In a nutshell, unless there is massive appreciation, its not worth it just for cash flow. 

Dont be afraid to look outside of your market if you cant find anything there. 

Welcome to BP!!!

Hope that helps.