I'm working my way through Brandon Turner's Rental Property Investing, and I finished the rental analysis chapter yesterday. Since I don't have the capital for investment yet, I thought I would practice analyzing properties I find on Zillow. I'm posting them here in case I find a good deal that someone wants to act on, and also to get some feedback. I don't want to break the rules about "offering deals" or anything in that realm so I won't post a link to property.

It might not help you right away, but my goal right now is to help someone find a deal since I can't find one myself. At least then I'll know that I can do it on my own when the time comes.

Unfortunately the property today doesn't make money. I keep looking for a property in the loop that is worth investing in as a rental property, but to no avail.

This property, in the 77023 zip code, is selling for a list price of $159,900. I kept the list price as the purchase price, but maybe you could negotiate the price down if you know the area is worth less than advertised.

I estimate a total project cost of $187,200 after closing costs, prerent holding cost, and repairs. I estimated $20,000 for repairs because it looks like the house needs some structural work, but maybe that is not the case. I'm am trying to envision a worst possible case scenario for the project to be viable.

A loan at 20% down 30 years is going to be $834.43 monthly. This loan is for $128,000 with $32,000 down and therefore does not include the price of repairs. I am assuming that as a part of the startup capital.

The Total Project Cost minus the loan then comes out to $59,200.

Fair Market Rent estimate by Zillow is $1227.

Total Expenses

Mortgage 834.43

Taxes 182

Insurance 52

Vacancy 60

Repairs 60

Cap Ex 150

Prop Manager 132

Total $1474 per month

Unfortunately it seems to work out to negative cash flow at $-247 per month. Note that this doesn't work in the assumption that you are paying 80% of the value that Brandon recommends in the book. Maybe you could make it work if you go see the property and get a better deal.

Let me know what you think. I know I messed up somewhere so let me know how this could be improved. I'll continue to post analyses in this thread and hopefully we'll find a winner one day.

Houston, Texas

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