Help Please, 1st Deal Buy & Hold Analysis

[Jennifer Ullrich]

Good morning, 

I currently have 2 properties that I'm looking at for my 1st deal, but when I put the #s into the BP rental property calculator, it looks like the cash flow is minimal or negative.  Am I doing this correctly?

Option 1- Zip Code 32763

Purchase Price- $105,900

Taxes $1,616/year

Rent- $950/month

Closing costs: $5,500 + $1500 attorneys fees

Expenses: 10% management fee, Insurance, 

Downpayment- 25% down $84675

Loan Interest- as myself 4.875, as an LLC 7.99 & 6 points on a 30 year fixed

I'm running into issues with estimating the following:

Vacancy- I've ready the lowest you should estimate in %, but 10 is recommended?

Repairs & maintenance- It's a turnkey property, so is 5% a good #?

Cap Expenditures- I'm so lost on this formula, any help is appreciated.

Calculated cashflow for me to take the loan out is $38.51

Obviously, if this is the real# it's not a good purchase, but can anyone assist with analyzing this deal from an expert's perspective please?   

Your help is very much appreciated.

Option 1- Zip Code 32738

Purchase Price- $112,900

Taxes $1,799/year

Rent- $1050/month

all the rest still apply from above.

Cash flow estimated at $5.48/month

Thanks in advance

Jen

[Steve Vaughan]

I haven't used the rental calculator at all, but it sounds about right.  I can't pencil in my area with anything close to a decent return with an asset earning less than 1%/mo. And my property taxes are much lower than your zip code!  I also self-manage.  Sure I factor in the cost of a PM, but it really is just for my time.

Shocking initial and long-term cost difference between financing in your name vs the LLC, huh? Folks need to see that. 4 pts and over 3% annually? Everyone seems to be getting all sophisticated about asset protection in SFRs and are blind to this cost and many others.

What's not factored in to the rental calculator in your example is the true IRR. Will this be an asset that appreciates in your opinion? Will the tax advantages help you? Are you a high wage and salary earner? There is more to an investment choice than CF, but don't be doing the tenant and toilet thing while losing money monthly. Some of my value plays are only break-even cashflow-wise. But they had equity built-in and the long-term prospects were excellent. Hope this helps @Jennifer Ullrich!