1st Deal Help - South Atlanta Numbers

[Matt Ward]

Hi,

Been trying to learn as much as I can and run numbers and wanted help of some folks with local experience. Have been looking in Fayette, Coweta, Henry and Fulton counties and have found a couple deals that to me seemed good. Wanted to get some second opinions as I'm pretty new. Thanks.

All of these are based off my numbers and seller reported numbers. Can you say from looking at these if they are good, if my values are way off or what thoughts would be? Would really appreciate help.

Deal 1:

Purchase Price: ~90k

# Units: 2

Rent: 1300

Cap Rate: 11.40%

1 Year Cash ROI: 16.61%

1 Year Net Cash Flow: 3734

Deal 2:

Purchase Price: ~175k

# Units: 3

Rent: 2400

Cap Rate: 12.82%

1 Year Cash ROI: 24%

1 Year Net Cash Flow: 10198

Deal 3:

Purchase Price: ~80k

# Units: 2

Rent: 1160

Cap Rate: 11.92%

1 Year Cash ROI: 18.15%

1 Year Net Cash Flow: 3534

Deal 4:

Purchase Price: ~120k

# Units: 2

Rent: 1450

Cap Rate: 10.21%

1 Year Cash ROI: 12.63%

1 Year Net Cash Flow: 3612

Deal 5:

Purchase Price: ~83k

# Units: 2

Rent: 1300

Cap Rate: 11.21%

1 Year Cash ROI: 15.68%

1 Year Net Cash Flow: 3328

Deal 6:

Purchase Price: ~100k

# Units: 2

Rent: 1600

Cap Rate: 12.37%

1 Year Cash ROI: 20.82%

1 Year Net Cash Flow: 5154

Thanks,

Matt

[Mike O'Connor]

All of those Cap rates look good but there is much more to it than just the rent and purchase price to make sure your Cap rates and cash flow are correct.

- Will you be managing these yourself? If not, what is the managers %.

- What % of income did you allocate towards expenses?

- What would the taxes and insurance be for the property?

- What is the condition of the property? Does it need a new roof, plumbing, HVAC, etc? Those factors could quickly increase your acquisition costs.

- Are the rents currently below market value? Do the tenants currently pay for their utilities (and if not, is the property sub-metered for water)?

Those are just a few items, but you will need to get more details in order for someone to properly evaluate things.