analysis for my first property

[Tomi Stoya]

Dear community,

For the past 6 months I have been actively looking to buy my first investment property. I looked for a property to yield at least 8% CoC return, but unfortunately I could not find any such property. I have seen a total of 20 or 30 local properties so far. The cap rates that I have calculated on almost all of them are around 5-6% and cash on cash returns have been between 2% and 4.5%. Below I have shared my analysis on 3 of these properties.

One would think that properties would not sell at 2 or 4% projected CoC, but below properties sold and they sold fairly quickly. This makes me wonder whether my analysis are reasonable or whether my expectations for return actually match local market conditions?

I would very much appreciate to hear the opinion of other investors.

Property Name	A	B	C
type	8 plex (8 x 1 BD, 1BA)	4 plex (4 x 2BD, 1BA)	4 plex (4 x 3BD, 2BA)
List price	$341,000.00	$313,500.00	$400,000.00
Actually sold for	$320,000.00	$300,000.00	$380,000.00
down payment (25% of price)	$80,000.00	$75,000.00	$95,000.00
loan (75% of purchase price)	$240,000.00	$225,000.00	$285,000.00
investment (down payment + closing costs $3500)	$83,500.00	$78,500.00	$98,500.00
taxes	$5,604.37	$5,783.25	$8,609.00
Insurance	$1,200.00	$800.00	$1,000.00
monthly:
Rent	$2,870.00	$2,660.00	$3,700.00
Vacancy 5%	$144.00	$133.00	$185.00
Repairs 5%	$144.00	$133.00	$185.00
Insurance	$100.00	$66.67	$83.33
Tax	$467.03	$481.94	$717.42
PMI
Prop management 8%	$230.00	$213.00	$296.00
Lawn care	$50.00	$50.00	$50.00
Snow removal	$50.00	$50.00	$50.00
Electricity
Gas
Garbage	$50.00
Water
Sewer
CAPEX ($183 or 8% of rent, whatever is higher)	$230.00	$213.00	$296.00
Operating expanse	$1,465.03	$1,340.60	$1,862.75
Net Operating Income (NOI)	$1,404.97	$1,319.40	$1,837.25
Mortgage @ 4.65% 30 year	$1,237.53	$1,160.18	$1,469.56
Cash flow	$167.44	$159.21	$367.69
COC return	2.41%	2.43%	4.48%
CAP RATE	5.27%	5.28%	5.80%

[John Leavelle]

@Tomi Stoya

Your analysis looks to be correct.  If other investors are buying properties with such slim margins, then, your local market may not be an ideal investment choice.  You may need to look elsewhere.