How to Analyze a Deal

[Ali Hebert]

My boyfriend and I are new investors looking to purchase our first property. We have been following the bigger pockets outline of how to analyze a deal but when we run the numbers, it’s seems like none of the properties we look at are “deals”. We realize not every property is an instant cash flow but we are stuck in figuring out if it’s our analysis of a deal or if in fact they really aren’t deals at all. We are looking for a single family to first live in for at least a year and then rent out. We are concerned we aren’t analyzing correctly. Here is a recent example:

Single Family 129900
Rental Income: $1250-$1300

Taxes: 120

Insurance: 50

Vacancy/Repairs/Capital Expenditures: 5% each=$62.50 each

Property Management: 5% each=$62.50

Water: $75-$100

Garbage: $15

Utilities: 0

PMI: $10

OPERATING EXPENDITURES: $655

MORTGAGE: 30 years@ 3% down and interest of 3.5%

Mortgage and Operating Expenditures= 1481(?)

Rent 1250-Operating Expenditures 1481= (negative cash flow)

We are continuing to get negative cash flow and a negative ROI...

What are we missing?