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Updated almost 5 years ago on . Most recent reply
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Newbie Real Estate Analysis
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.
Most Popular Reply
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Like Tim mentioned it's hard to find anything on zillow or MLS that would cashflow. One thing I wanted to add is that zillow can be way off on the fair market rents, it's important to pull real comps off the MLS and see for yourself. If you don't have your real estate license I would recommend working with someone who does so they can pull true comps and let you know what market rent rates to expect.