Rental Analysis Report

[Emily Gerlach]

Hello - I’m purchasing my very first rental property and I have some questions regarding a rental analysis report that I completed… So I would to make sure that the numbers look good, as well as ask a few questions. Thank you 

[Tim Herman]

@Emily Gerlach you haven't posted any numbers. Makes hard to analyze.

[Emily Gerlach]

Quote from @Tim Herman:

@Emily Gerlach you haven't posted any numbers. Makes hard to analyze.
Here are the numbers:

Purchase price:$230,000

Expected Monthly Rent:$1,500

I ran the rental analysis and here are the returns:

NOI: $11,868

COC ROI: 0.09%
Pro forma Cap: 5.16%
purchase cap: 5.16%
Cash Flow: $120/Mth

Please let me know if I’ve missed anything. Thank you 

[Emily Gerlach]

Quote from @Emily Gerlach:

Quote from @Tim Herman:

@Emily Gerlach you haven't posted any numbers. Makes hard to analyze.
Here are the numbers:

Purchase price:$230,000

Put down: $60,000

Expected Monthly Rent:$1,500

I ran the rental analysis and here are the returns:

NOI: $11,868

COC ROI: 0.09%
Pro forma Cap: 5.16%
purchase cap: 5.16%
Cash Flow: $120/Mth

Please let me know if I’ve missed anything. Thank you 

[Emily Gerlach]

Not sure if you saw my reply…  still waiting for an answer?

[Emily Gerlach]

Just want to make sure you read my reply. Thank you 

[Tim Herman]

@Emily Gerlach What are you including in your expenses to get a NOI of $11868. Are you budgeting reserves for vacancy, repairs and capex. Are you including property management.

[Emily Gerlach]

The property manager I'm speaking with said to put about $300 in reserves... Then I'm budgeting: 5% Maintenance, 5% Vacancy: 5% CapEx and 8% for property manager.

[Tim Herman]

@Emily Gerlach Have you run a capex budget and it showed that $75 is sufficient to cover everything. 1 item in a capex budget is floors. Assume 1500 sf of flooring. My area it is $6 sf to replace. Commercial warranty on flooring is 10 years. $9000/120 month lifespan=$75 for just 1 item. Still have to budget for roof, hvac, appliances, hot water heater, bath and kitchen remodel, etc.

Does the property manager have any rent up fees because 8% is low in most areas. Most are between 10-12%. Vacancy of 5% is the same as a turnover every 20 months. I like to use 8% or 1 turnover ever year. 

[Drew Sygit]

Why only $1500 rent? Seems low.

($120/month cashflow x 12 months) = $1440 / Cash Invested ($60k) = 2.4% Cash-on-Cash

What are the one-time closing costs (not escrows)? Those would lower your Cash-on-Cash.

Why would you invest in this?

[Emily Gerlach]

Quote from @Drew Sygit:

Why only $1500 rent? Seems low.

($120/month cashflow x 12 months) = $1440 / Cash Invested ($60k) = 2.4% Cash-on-Cash

What are the one-time closing costs (not escrows)? Those would lower your Cash-on-Cash.

Why would you invest in this?
************************************
The area is a military community. So that’s  why only $1,500/MTH for now. The military base is experiencing a major shortage in housing so there is expected growth in building more housing. And, the forecast growth is:

1 YR 20%
2 YR 32.1%
3 YR 36.5%

Closing costs are: $13,616

Includes: $10,308 plus other costs: $3,308
Points 0.875%
$1,507

[Emily Gerlach]

Also, the closing costs are just an estimate…. They are not final. But I would appreciate your opinion on whether the closing costs are too high or if its average. Thank you! 

[Drew Sygit]

Includes: $10,308 plus other costs: $3,308

Not very helpful:(

[Emily Gerlach]

Not sure why it’s not very helpful… please tell me what exactly you’re looking for so I can provide it to you. Thank you 😊