SFH in Western Maryland

[Michael Marcoux]

Hey BP,

Got a deal I'm agonizing over. It's a 1000 sq ft, 3 bed, 1 bath victorian duplex built in the 1890's. The asking price is $25,000, and it needs 10-15k in repairs, mostly cosmetic (i.e. resand/stain floor, drywall work, paint, etc.) The wholesaler is saying the place could rent easily for $800, which I confirmed with rentometer.com.

That being said, I'm agonizing over the cash flow for the property. I know what taxes and insurance will be,  but since I've never done this before I have no idea how to estimate the cost of future repairs, property management, etc. I just pulled the rest of the figures out of thin air, they are as follows:

TAXES	1006
INSURANCE	1000
propert mgmt	1152 (12% rent?)
utilities	1000 (?)
advertising	300 (?)
repairs	3000 (?)

(I'm actually not sure who pays for the utilities - I thought the tenant did, but I saw it in the BP analysis list, so...)

If that's the case, this place only cash flows $196/month, or $2352 a year. 

Do these figures look right at all?Do you think 3k/yr for repairs is too much (hopefully not too little?) I'm hoping something is wrong. If they figures are right, is this a deal you would do?

[Richard W.]

Dig deeper into the market rents for that area.  Check CL, hotpads, and check with local PM websites to get a stronger feel for what the rents will be.  Are you going to use a PM?  if so, contact them, and ask them what they think they can rent the place for, and what fees they charge.

There are some easy to use spreadsheets under the ANALYZE ribbon that can get you a clear idea of what your expenses, net income, and COC could/would be.....fun for hours as you play with all the moving parts and say to yourself ..."What if this.....what if that...."

Thanks for sharing your concerns