Looking for help analyzing this deal

[Alex Cotter]

Hello BP,

First deal Single Family through a turnkey rental company. The property is in a A- neighborhood. Let me know your thoughts. I struggle with putting this into perspective with other deals. 

Price: 85,000 (comps 90-95k)

Improvements: $0

Rent: 14,100 (verified)

Annual Taxes: 4,000 

Insurance: 500

Management: (Fixed) 950

Maintenance: $800

Vacancy: ~1175 (logic: 2 year leases w/ 1 month gap in between + 1 mo rent fee to Prop Mgmt)

CapEx: $0 first 2 years

Utilities Water: $1200 paid by owner

Utilities other: $0 paid by tenant

------------------------------------

Revenues: 14,100

Expenses: 8,623

Return: 14100-8623 = 5477, 5477/85000 = 6.5%

[Eddie Werner]

The taxes kill this deal for me.  I don't invest in properties where two months of rent don't cover the yearly taxes.  Example: If yearly taxes are $1,400 then I need to be able to get at least $700/month in rent.  That's the most I will go.  Depending on your area this may be achievable.

Your rent collected and yearly taxes show that 3.5 months of rent will be needed to pay the yearly taxes.  That is just too much for me personally when you consider all the other expense variables.  You mentioned this is potentially your first deal.  Don't jump because you are emotionally tied (I think everyone is to their first potential deal).  Just move on and wait until all the numbers work.  There will be many more properties to buy.