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Updated over 9 years ago on . Most recent reply

User Stats

19
Posts
9
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Kevin Beres
  • Investor
  • Richmond, VA
9
Votes |
19
Posts

Help reviewing a deal, should I cut my losses?

Kevin Beres
  • Investor
  • Richmond, VA
Posted

Hello everyone, I was looking for advice on how to proceed on a potential buy & hold property I am looking at. I made a very rookie mistake and got to eager to get a deal done and did not run the full numbers. Now I am looking at the numbers again and I don't know if this property is worth it.

Property is $78,000 I would be putting 25% down, the closing cost would be $3000 and an interest rate of 4.6%. It would need $10K to get it into rental shape where I could ask $950-1050 a month in rent. This is in Richmond, VA

I have already paid a deposit of $1000 on this property but after running the numbers through the calculator on BP and accounting for 10% vacancy, 15% Repair & Cap EX COMBINED and paying for water at $50 this property comes in at 6%-8% cap rate and it seems like it has the potential to be a money pit or at least no returns.

My question is am I being overly cautious or should I cut my losses on this one and back out of the deal? I would rather lose a $1000 than be stuck with a bad property.

Most Popular Reply

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15,177
Posts
11,262
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Joel Owens
  • Real Estate Broker
  • Canton, GA
11,262
Votes |
15,177
Posts
Joel Owens
  • Real Estate Broker
  • Canton, GA
ModeratorReplied

This sounds like a single family property.

Why are you paying water on a single family?? If that occurs at all it is usually in multi-family properties.

Single family the tenant typically pays everything. No way I would want to pay water at those rent to purchase price ratio's.

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