First deal - analysis help

[Morgan Smith]

Hi there, I'm brand new to this site.  Can't even believe a resource like BP exists - there is so much valuable information here and such a supportive community.  Just trying to wade through it all with the goal of making my first offer in the coming months.

I'm interested in long-term buy and hold, willing to take a hit on CoC to secure a solid SFR in a B+ or higher neighborhood. Currently looking in and around Kansas City.

Here is an example of the type of deal I'm finding.  I'm trying to be conservative with my numbers so I don't overextend myself.  Any constructive feedback is welcome!  What I'm missing, things to consider, etc.  Thanks!

Purchase - $90,000

CTC - $18,000

Rent (annual) - $11,400

Property tax (annual) - $1,200

Insurance (annual) - $600

PM (annual) - $960

Vacancy @ 10% (annual) - $1,140

Repairs @ 10% (annual) - $1,140

Mortgage (annual) - $4,128

Utilities / lawncare - paid by tenant

NOI - $6,360

Cashflow (monthly) - $186

CoC - 12.4%

Not terrible?  Really looking forward to hearing your thoughts.

[Lee Ripma]

@Morgan Smith, That makes sense and it sounds like you're going into it informed. My problem with TK is that you pay top dollar for a place that is "lipstick on a pig" rather than a nice renovation. If I'm going to buy a house retail then I might as well get it off the MLS and get a rehab job targeted at an owner occupant. Similarly, I could buy a house off the MLS that needs a small amount of updating, have someone local do it, turn it over to PM, and I'd have the same thing as a TK but at a lower price point.

What I really want to do is reuse my down payment over and over again to get into properties, hence the BRRRR method. TK is often SFH, I'd really rather have a MF so that I can invest in things like a coin operated washer dryer and storage units to increase NOI and have economies of scale as I grow my business. If I want 1,000 units then it's easier to get them in MF than SFH. I went through a lot of options, thought about TK, thought about my goals, went to KC, and just closed on 7 units, a duplex (that I'm turning into a triplex) and a quadplex with my RE partner. We will renovate and do a cash out refi on both. We won't have nothing in the deal after the cash-out, but I will have a whole lot less than if I had just bought the places retail. So that was my process over the last year and a half, it took me a long time to get there. I also think there are other ways to invest without buying houses and if I didn't want to get involved I would probably tend towards funding through a crowd funding platform or to those I met on BP. You can really get high interest on short-terms loans for RE.

Just make sure that wherever you buy really does have good rental potential and will cash flow because it probably won't appreciate much. If you PM me I'd be happy to have a phone conversation about my process. Best of luck!