Is This A Good Deal? My Analysis Numbers!

[J P.]

Hello, all! Newbie here! Looking for my first deal within the next month. I found a place in the Pine Castle area of Orlando. It's in between Edgewood and Pinecastle (Would be off Oakridge and to the West of Orange by a hair).

Asking price is $96.9k. Looking at comps (and it seems to be a foreclosure), I'm thinking of my max offer being 80k so that was used for analysis. The home is a 3/1 with 1500 sq ft, which I think is HUGE! Also, to note, it has a pool. Looking at the pictures, it definitely needs a kitchen rehab and flooring as there has been some damage (some stripping of the tiles, appliances, and some of the cabinets removed). I'm thinking if I can do the painting of the inside and try to tackle the flooring (watching videos and shows), I can keep my rehab price below 30k. What do you think?

Anyway, here's my analysis! I hope you're able to see!

I do have a question on the analysis. I originally did it without the cost of rehab but in example below I included it b/c I wasn't sure if you include rehab costs if it's just a one time thing?

Without the rehab costs, the cash & closing cost is 18,400, making the cap rate 15.9 and cash on cash 66.9%.

With rehab costs (in case you can't see) cap is 15, and cash on cash is 27.8%.

Thanks so much for your help!

[Wes Brand]

Your returns are wrong. CoC is ~6%, not 15%, using your numbers (you put 44k cash into it, and you're getting back 2688/yr. You'll want to look at insurance with the pool, I suspect it'll be higher than 100/month. Also, pool maintenance will probably push your maintenance budget over 110/month.

Are you rolling capex and maintenance into the same budget? If so, think about how many years of life certain "big ticket" expenses (roof, furnace, hot water heater, siding) have left and how much it will cost to replace them and make sure you budget enough to cover that. 

I see no property management fees here. You should include them in your analysis anyway because otherwise you're working for free and likely to get sucked into a bad deal that only works because you're the one doing the PM. Generally mortgage is not included in the expenses column, because it's a debt-repayment / equity building thing. (don't get me wrong, it does reduce your cashflow, but it's usually accounted for differently)