17 single family home package 385K

[Ken Bowen]

Hello, my name is Ken and I am relatively new to this website.  I kind of feel as though I found a buried treasure with the wealth of knowledge throughout this site.  I'll get straight to the point; I located a deal in St. Louis Missouri for 17 single family homes, all currently occupied by tenants, I am seeking input from the you guys to determine if this would be a deal that made sense or if I should pass.  I am attaching the spreadsheet link to dropbox.com which has the information needed for an analysis.  I greatly appreciate any advice you could provide.  It should be noted, it appears as though these homes are all in low income areas.

https://db.tt/0341zO2z

Thank you very much, 

Ken Bowen

[Mackal Smith]

Ken, the numbers look good. If you can swing financing with 20% down, you get about a 54% return on your money after figuring 10% for capex, 10% management fee, 8% vacancy, taxes, and insurance. That is a really rough area however so you may want to figure more like 12 to 15% vacancy and maybe more for capex as I suspect that damage to those properties will be a pretty common occurrence. 

Are you an experienced investor? Have you invested in that area before? I personally don't invest there, I stick more to the South City area but that's not to say it won't work out for you. If you are looking at just the numbers, it sounds solid. Like everything else though much of it will boil down to good numbers *plus* your experience in real estate investing in general *plus* your experience with investing in that particular area *plus* your ability to weather through potential difficulties. I would definitely make sure you do plenty of due diligence before diving in. Have you received rent rolls/histories? Do you have multiple rent strategies (ie, have you investigated whether they will pass Section 8 inspections)? Have you looked at housing prices on anything other than Zillow for that area?