Need help analysing property

[Robert Juanes]

I have been analysing some properties for practice and came across this one that I think it's a good deal just not 100% sure since I don't have any properties or experience just starting. I would like some feedback on it just to move in on it. It's a single family home but has two apartments in the back so it's three units rents are total of 2,125, selling for 185,000,taxes are 1500 year, payment would be like 900...I also estimated for all expenses and vacancies at 10% each...looking forward for someone to help me out thanks ...

[Neil Schoepp]

@Robert Juanes

Robert when looking at deals it would be of help to break down your expenses. This is especially important so that we could suggest additional expenses that you may have overlooked or maybe even say for this type of property you do not need to include this or that.

Your analysis should look similar to this

Gross Income    25500 (2125*12)

Operating Expenses  (you still need this number)

Net Operating Income (NOI) you get this number by subtracting Operating Expenses from Gross Income.

To get your operating expense number add up the following 

Taxes

Electric

Water & Sewer

Trash Pickup

Lawn care and/or snow removal

Gas / oil / propane

Vacancy (use 5-7% of gross income)

Maintenance (10% of gross income)

Insurance

Home owners Association Fee (HOA) You may or may not have this one

I like to include a 5% misc expense ( i use this as a reserve)

You may be paying all of these or just some. They certainly should not be figured at a generic 10%.

You can gather this information in a variance of ways.

Tax collectors web page for the county your property is in. Here in my county I gather my info with the County name then state abbreviation and GIS. This brings me to a map site that I can now search.

Ask the seller for his numbers. This will get you in the ballpark but you MUST INDEPENDENTLY VERIFY those numbers on your own. Call the power company, trash company etc and ask them. An example of this is I once thought it cost $65 a month for trash removal. When I called the company they told me it would be $28. 

Call 3 insurance companies and ask them for a quote. 

You get the idea.

After you have those numbers then list your financing

Purchase price (for now you can use the asking price but after your analysis you'll come up with your                                  own price then negotiate something as close to your price as possible)

Down Payment (This could be as low as 0% if your a VET and as high as 20 to 25% depending on                                     your investing strategy)

Interest rate 

This will give you your monthly mortgage 

You now subtract your mortgage from your NOI and your looking at your cash flow.

When you put all of this together you"ll have a much better picture of how this property looks. Then post those numbers and we can offer you more and better feed back. 

I wish you Success.