SFR - What do you think?

[Richard Mann]

Hi,

I came across this home and ran some preliminary numbers using the spreadsheet that @Joshua Dorkin so graciously provided. I have attached a screenshot of the sheet and would appreciate your input. Thanks!

[Ellis San Jose]

Vacancy is low, if you have just one month per year of vacancy that's already 8%. If you use 2%, you are expecting roughly one week of vacancy per year.

If we do a quick & dirty analysis.

at 50% expenses of gross rent you get

$6,000yr or $500/month rent-$365/month mortgage payment

= $135 positive cash flow

ROI ($1,620/$48,000) = 3%

If you are at 40% expenses of gross rent

$7,200 or $600/month -$365/m mortgage

=$235 positive cash flow

ROI ($2,820/$48,000)=5.9%

Your cap rate is 5% at 50% expenses & 6% cap at 40% expenses

I agree with Matt Morgan, if this is for cash flow only then it doesn't look so great.

If you are placing a bet for appreciation, you have at least a possible positive cash flow.