Deal Analysis - Practice

[David A Lisowski]

So I had this email pop up this morning and I thought I'd give it a shot at analyzing this deal.

I don't know much about the area, and this was in an effort to practice making quick offers. Everything was sourced online, and based on the listing, the property probably has more issues beyond cosmetic repairs. So that probably kills the deal.

But from what I did, it seems good on paper. Unless there is something I have blinders to and I'm not seeing.

Here's my write up:

Deal Analysis:

MLS: 1091507

Purchase Price: $75,000

Loan Amount = $52,500

Down (30%) = $22,500

Closing Costs = $3,500

Cash-to-close: $26,000

P&I at 4.0% = $250.64

RE Tax = $56.92

HOI = $30

Total PITIA = $337.56

Rent = $1,000

Expenses:

PITIA = $337.56

Property Manager = $100

Capital Expenditures = $100

Vacancy = $50

Utilities = $100

Operating Expenses = $687.56

NOI = $1,000 - $687.56 = $312.44

NOI (50% Rule) = $1,000 - $837.56 = $162.44

837.56 = 337.56 + 0.5(1000)

Cash-on-cash = 3,749.28/26,000 = 0.1442

Cash-on-cash (50% Rule) = 1,949.28/26,000 = 0.07497

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Renovation Analysis:

Post-Rehab value est = $100,000

Purchase Price: $75,000

Loan Amount = $60,000

Down (20%) = $15,000

Rehab/Reno (10% PP) = $7,500

Closing Costs = $3,900

Cash-to-close: $26,400

P&I at 4.0% = $286.45

RE Tax = $56.92

HOI = $30

Total PITIA = $373.37

Post-Rehab rent = $1,300

Expenses:

PITIA = $373.37

Property Manager = $100

Capital Expenditures = $100

Vacancy = $50

Utilities = $100

Operating Expenses = $723.37

NOI = $1,300 - $727.37 = $527.63

NOI (50% Rule) = $1,300 - $1,023.37 = $267.63

1,023.37 = 373.37 + 0.5(1300)

Cash-on-cash = 6,331.56/26,400 = 0.2398

Cash-on-cash (50% Rule) = 3,211.56/26,400 = 0.12165