Haverhill, MA - Opportunity - Seeking Analysis Advice

[Kyle Cabral]

Hi All,

I'm new to the idea behind real estate investing and am really all hands on deck in taking the remainder of 2014 to learn, solidify my focus, and move towards my first flip in 2015 and second buy and hold. I recently have been speaking to someone in Haverill, MA whom does not have their property listed (3BR/1Bath - 1400sqft) on the MLS or anywhere for that matter but seems to have a positive cash flow that one would be interested in, especially for the "starting out" investor. Here is my analysis after watching @Brand Turners YouTube video on how to quickly evaluate a deal.

Asking Price: $130,000
Down Payment: 20%
Remaining: $104,000
Interest: 4.5% over 30 Years
Final P&I: $526.95
HOA Fee: NONE

Rentometer has the median rental for a 3BR to be $1180 but believe you could push the envelope for $1250 - $1300 with proper tenant screening and past experience with another condo I own safely renting for more than rentometer medians.

Based on %50 percent rule, 1300/2 = 650 which would make my cashflow for this property $123.05 without negotiating down.  She has also made mention this was newly renovated.

I'd be curious to see how others on the forum would approach this deal and what other resources you would use.  Does this offer entice you to schedule a meeting or take a visit to the actual property?

Thank you all in advance for your knowledge, expertise, and help!

Kyle

[Bill Jacobsen]

I like to get a return of 3 percentage points above my cost of money.  In this case I would typically want about 7.5%  Using your 50% rule to get $650 per month gives a value of $650X12 or $7,800.  Then divide by .075 to get $104,000.  As others have suggested you have to drill down to get a handle on the actual expenses.

Good Luck.

Bill