First buy & hold under contract

[Spenser Harding]

So excited to have my first property under contract! I posted a couple months ago about a duplex I was examining and decided to stick with a SFH in the Tacoma area. The property I found is a short sale and is in bank review right now, the only bad part is a 3k lawyer fee to negotiate the short sale. It a 3/2 1300sq ft and is located less than a mile from a Pacfic Lutheran University and also near JBLM military base. Here are the numbers I have found as to numbers:

List price: $125000
Down pmt: 20%
SS Fee: $3000
repairs/cleaning: $2000 (clean carpet/paint interior/landscaping)

Rent: $1295
PITI: $810
Vacancy: $100
Maintenence: $150

Cash flow: $235

Is $150 enough/too much for cap-ex on house less than 10 years old? Please critique!

[Aaron Montague]

@Spenser Harding 

Looks like a pass for me at full price.  It does pass the 1% rule, so I ran the numbers.  Your cash on cash return may actually be worse than this because of the $3000 short sale fee to the lawyer. 

I would pay $78400 for this property.  It would then meet my minimum requirements of $150/month cash flow (actual $302) and 15% cash on cash return (actual 15.01%).

Here is how I view your potential purchase:

Mortgage Rate 5.00%

Length of Mortgage in years 30

Monthly Mortgage payment $601.24

Taxes $108.33 (made up, but PITI comes to $810)

Sewer and Water $-

Trash $- (Do tenants take care of the trash?)

Heat/Utilities $-

HOA $-

Cap Ex and Ops $150.00 (this is my minimum)

Insurance $100.00 (made up, but PITI comes to $810)

Mgmt Fee $129.50

Vacancy $103.60

Total Expenses$1,192.67

Total Revenue $1,295.00

Cashflow/month $102.33

Cash on Cash Return 3.67%