A rudimentary first analysis of a rental home in DFW, Texas.

[Zachary D.]

So, since I live abroad, I thought I would run some numbers on a run down place in my hometown. I hope everyone can pull back the curtains on this property. I feel like I'm barking up the wrong tree because this definitely needs a lot of repairs. But, the gap in cost and ARV seems attractive.

Property Features:

Address: http://www.zillow.com/homedetails/821-Running-Cree...

3 Bedroom 2 Bath

1986

Estimated ARV: 114,000 ( Based on redfin.com and zillow.com research )

Estimated Rent: $1300 / Month ( Based on similar criteria from around the city. )

Selling Price: 77,500

My offer: 70,000

Repairs: 7,500 ( arbitrary )

My down payment: 14,000

Payment (Including taxes, insurance, per willow) $501

Closing costs: not assumed

Commissions: not assumed

1. Determine if the selling price is reasonable considering the bad condition.

Looking at the follow numbers leads me to believe that this is a possible deal.

My offer: ( ARV$114,000 - 70%Rule ) - $10,000(Repairs) = Appx. $70,000.

2. Determine Cash Flow ( Based on area average rent and 50% rule ).

($1300 The normal rent in the area / 2 ) - $500 Mortgage = Appx. $150 of income.

3. Determine the cash on cash return, or how much of my downpayment I earn back in a year.

Yearly Income / My down payment = Amount of downpayment recovered yearly.

 $1,800 /  ($14,000  + $7,500) = 8% of the down payment and initial repairs recovered each yearly. (CoC)

Conclusion

If I used the rules correctly, I think I might have a ballpark outlook on this property as a single family rental. I can't use the BP calculator anymore and I'm not ready to go pro, so this is what I have for the moment. 

If I included the above not assumed commissions and fee, I feel like the deal might be fruitless. :( sad face.

Any insights would be helpful!