Help with deal analysis

[Jimmy Chin]

Hi all,

I'm new to real estate investing and am practicing doing some deal analysis. I need help running numbers on a sample property as my results do not look/feel right (getting negative cashflow). I'm pretty sure my data is wrong but I can't seem to figure what it is. I tried doing the same type of analysis for multiple properties and keep getting negative cashflows.

Address: 11903 Fork Creek Dr, Houston TX 77065

Purchase price: $110,000 (asking $128,000)

Loan type: 30yr @ 4% fixed

Cash needed = $22,000 (20% downpayment) + $5000 closing = $27,000

Monthly rent = $1,350

Property taxes: $209/month

Insurance: $396/month

Other expenses (water, sewage, etc): $100

Vacancy/repairs/cap expenditures/prop mgmt: 5/5/5/10

Result = $1,350 (rent) - $1,425 (total expenses) = -$75.02 cashflow (??)

Where am I going wrong here? Or am I correct and this is a negative cashflow property? I'd appreciate any insight!

[Fred Heller]

OK I'll bite.

This property is in the Hastings Green subdivision. I pulled the sales comps for that subdivision, which suggest the property's market value is $120,000 give or take. Unless the seller is extremely motivated, you're not likely to get it for $110,000. Especially since, according to the listing, it's been recently updated with a new roof, etc.

Your rental number is a little high. The CMA shows the average rental price in the Hastings Green subdivision is $1271, not $1350.

Your numbers for taxes seem about right.

Your numbers for insurance look very high to me, unless it's in a flood zone. I pay about $1200 per year for insurance for a similar home. We're not in a flood zone.

Good luck!