Help with SFH Buy & Hold Analysis

[Kelsy Soderlund]

Hello Bigger Pockets!

My partner and I are getting closer to closing our first buy and hold deal and are hoping we could get some more experienced eyes to help us analyze this.

http://www.biggerpockets.com/buy_and_hold_results/3584.pdf?c=1388869919

In using the analysis tool I tried to keep the numbers as conservative as possible. Of course, we would negotiate the purchase price to be lower than the asking price. The rental income for comps in that area are between 800 - 1200 per month so I figure if it still cash flows at 750 it's a property we should definitely be considering. Couldn't figure the cap rate on comps as they were all n/a.

Regarding financing, we're considering using hard money for 18 months and refinancing the property conventionally to pay off the hard money loan.

To make this less confusing we'll call the property we're analyzing 'property A' and my partners property 'property B'.

My partner has a free and clear income property he is willing to use for collateral. In the case that we can't refinance property A conventionally we would refinance or sell property B.

We could refinance property B to purchase property A but it's in the final year of a tax auction foreclosure redemption period so, unfortunately, that isn't an option right now.

So, does this seem like a deal to you more experienced investors? And how else can we finance this?

Thanks! We're looking forward to everyone's responses!

[Andy Collins]

first I would question how "comps" have such a wide range, a comparable rental unit, one that is like the one you will end up with, shouldn't vary that much at all, maybe $100 at the very most (probable more like $50), are you just comparing a big area and anything 3 bedroom?

As far as your $25k rehab estimate, if you haven't seen the inside, you have no idea if its $10k or $80k,,,

Just go see the house, get a contractor to give you real bids, don't just think "plumbing, $x, electrical $y,,unless you are an expert.

Just slow down, don't "try to make something a deal", just see if it is a deal.

If it is a deal and the numbers work, great, but the biggest mistake you can make on your first deal is trying to make something work,,,look at a lot of properties, you will know it when you find the right one (and this could be it)

I'd rather see someone have your energy than someone that is looking for reasons a deal can't work,,your going in the right direction,,just slow down a little bit