Analyze 3/1 SFR

[Mark S.]

What is your max offer price on: 3BR/1BA, 1,000+ sq ft, 35 yrs old SFR, all electric, central air, all brick SFR. Area rent: $625/mo. Could maybe get $650. Area rank: "C" class neighborhood. Located on the border of low-income/section 8 multi-family properties and low-to-mid income SFRs, mostly owner occupied. Financing: 20% down, 30 yr fixed, 5% (or lower) interest rate. Expenses: Prop Mgmt (@10%): $63/mo Vacancy Loss (@10%): $63/mo Repairs (@10%): $63/mo Cap-Ex (@10%): $63/mo Taxes: $76/mo (at highest, based upon current PVA assessment, which is way high) Insurance: $75/mo guesstimate Total Expenses: $403 Property would need $3,000-$5,000 to get rent ready, including appliances.

[Bill Jacobsen]

You stated a cost of money at 5%.  I want 3 percentage points above that or 8%.  You also stated rent at $625 per month with expenses of $403 or a net of $222 per month or $2,664.  That amount divided by .08 is $33,300.  If the rehab is $5,000 then you can't pay more than $28,300.

Good Luck.

Bill