Rental Property Investor · Newhall, CA · Member since 2016 · 21 posts · 8 votes
Hello BP Community,
My fiance and I are looking to buy our first investment property in Dallas, TX (specifically Carrollton). We found a nice SFR that is practically the same house as every other one on the block (should be easy to rent) and has already been renovated. We ran some numbers and want to get some feedback on whether or not this looks like a good deal:
Details
3B/2Ba, 1,324 sq. ft.
PP: $172,000
Potential Rent: $1500 - $1700
Property Tax: $2955/yr
No HOA
Assumptions
5% Vacancy Rate
1% Cap-Ex
1% Repairs
$75/mo insurance (not in a flood zone)
$75/mo prop. mgmt.
We are basing the property management on discussions with 2 local companies. If you think we think we are off on any of our assumptions, we would love the feedback!
Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes
10y
The property taxes are going to be closer to $4k than $3k. Your insurance number seems a bit low. If that's from an actual quote, PM me the agent and I'll switch all my policies Monday morning. How old is the property, the roof and the HVAC? 5% for property management is most certainly low once they start hitting you with all their fees.
ETA: Has the foundation ever been repaired? Parts of Carrollton have really bad soil and if it broke once it will probably need more tweaking in the future.
Rental Property Investor · Newhall, CA · Member since 2016 · 21 posts · 8 votes
10y
@Todd Plambeck Thanks for insight. We actually haven't shopped around for insurance yet. What type of numbers have you been working with here in Dallas? The foundation & roof are both in good condition and the property was built in 1984. We met a property manager from Dallas Luxury Realty who quoted us a $75 flat fee. We're also waiting for a quote from One Prop property management. What percentage for PM is more realistic?
Investor · Irvine, CA · Member since 2009 · 7 posts · 2 votes
10y
Home insurance is definitely a bit low. I'd estimate it would be closer to the $1200/year. Your property tax is will probably be in the $4200 to $4800 range as well. Its usually around the 3%-3.2% in the DFW area. Are you also counting the lease commission which typically will be anywhere form 75% to 100% of the monthly rent in your fee? 7-10% for the rent is probably a more accurate percentage to use. I'd count the vacancy rate to be 8%-10% (4-6 weeks a year) to be on the conservative side.
Investor · Cincinnati, OH · Member since 2016 · 3 posts · 0 votes
10y
@Calvin Clark I agree with the other posts as well. I was also curious on your residual value of the property for your exit strategy? What is your holding period? In your DCF analysis did you factor in inflation growths for property taxes, insurance, and maintenance? Are you assuming that rental growth matches inflation growth then?
My fiance and I are looking to buy our first investment property in Dallas, TX (specifically Carrollton). We found a nice SFR that is practically the same house as every other one on the block (should be easy to rent) and has already been renovated. We ran some numbers and want to get some feedback on whether or not this looks like a good deal:
Details
3B/2Ba, 1,324 sq. ft.
PP: $172,000
Potential Rent: $1500 - $1700
Property Tax: $2955/yr
No HOA
Assumptions
5% Vacancy Rate
1% Cap-Ex
1% Repairs
$75/mo insurance (not in a flood zone)
$75/mo prop. mgmt.
We are basing the property management on discussions with 2 local companies. If you think we think we are off on any of our assumptions, we would love the feedback!
Assumptions may be low. How much cash flow are you looking for each month? I Typically project
Vacancy 5%, Repairs and CAP EX 15%, Property Management 10%, Insurance is around $100 a month.
Use the rental property calculator that you can find under the tools tab above to calculate cash flow. Also, is the purchase price of $172K the market price or will there be some built in equity when you purchase. Try to purchase at a discount so you can already have equity when u close.