Help With Analyzing A Deal in Kansas City Area

[Rustin Dowd]

Ok so I have a current deal that I know I can buy for $47,900. It appraised for $103,000 last year, it is a foreclosure property (divorce). So after looking at those numbers it seems like it is a great deal. However I know they are a ton of other factors that weigh in here. 

After using the bigger pockets rental calculator and looking at all expenses like property management, repairs and maintenance, cap ex, taxes, insurance, and vacancy my cash flow doesn't look great.  My gut tells me it is a good investment because of the purchase price and appraised value however the numbers I am running are telling me otherwise. Maybe my numbers are wrong but let me know what you think

----Here is the details-----

Purchase price: $47,900

Down Payment: 10% - 4,790

Rent: $800-$950

Vacancy: 8.33%

Gross Rent: $733-$871

Property management: (10%) $80-$95

Repairs and maintenance: (10% GR) $73-$87

Cap ex: (7% GR) $51-$60

Taxes (2016 Taxes $2,099) $175

Insurance: $100

Monthly Operating Expenses: $474-$513

Annual Operating Income: $8,800 -$10,453

Annual Operating Expense: $5,696-$6,157

Net Operating Income: $4,296

Mortgage Payment: $346 (15 year and 5.25% interest)

Cash Flow: -$87 - $11 (Gross Rent - Monthly Operating Expenses - Mortgage)

Thoughts? Is this really a bad deal or are my numbers skewed? I appreciate the help! 

Thanks,

Rustin 

[Lee Ripma]

@Kevin McConnell

Here is what you're missing, you just found 25k cash in your pocket and infinite cash on cash return! You are getting a 100k property for 50k so that means that in 6 months you can do a cash out refi of 75k. Take away the 50 that you owe and put down and that's 25k in your pocket that wasn't there before. Now the property will probably cash flow a little with that cash out but all the equity is the win. If you have no cash left in a deal your cash on cash is infinite. This is a really great deal.