Cash on Cash Returns 7.5% in Northern VA

[Nilesh Makhija]

Hello Everyone,

Wanted to bounce back a deal analysis which I am working on...

Purchase Price - $150,000

Closing Costs - $6000

Total Acquisition Costs = $156,000

Rental = $15,600 (1300*12)

Vacancy = $1560 (10% of Rental Income)

Total Income = $14,040

Annual Expenses

Taxes - 1200

Insurances - 1200

Maintenance - 1560 (10% of Rental Income)

HOA - $65*12 = $780

Total Expenses = $4740

NOI = $9300

Mortgage = $7312 (4% ARM with 15% down-payment)

Cash-flow = $1988

COCR = 7% 

CAP Rate = 6% (9300/150000)

Now I am acquiring property for a 10% discount based on ARV using the comps from MLS (0.5 mile radius, similar type and last 6 months duration). So potentially the net ROI would be good in the future, but I am concerned its not a great cash flow in the present. Now if i increase the rent by 50 bucks the COCR jumps to 9.5%.

Thoughts?