Newbie Seeks Advice From Investor Sensei!

[Lauren Apicella]

Looking at purchasing my first rental (Go Big or Go Home, Right??). These numbers came from the current owners Trailing 12. What do you think of this deal? What am I Missing? 

# of Units: 12

Purchase Price: 880,000

GOI: $128,378 (Already assumes a 5% Vacancy Rate)

Taxes: $24,250

Insurance: $3164

Management: $6,419

Grounds Maintenance.: $1,800

Repairs: $3,000

Electric: $817

Water/Sewer: $12,522

Alarm: $730

Trash: $2,196

NOI: 73,464

PITI: $5,623 (25% down - 4.5% INT)

Expenses: $27,500/year 

Cap: 8.35%

COC: 14.9%

GRM: 6.85

Thank You!!

[Mitch Messer]

@Lauren Apicella I'd still want to do some serious due diligence, but on the face of it nothing about those numbers scares me off. I'd want to dig deeper into the quality of the tenants (& leases) and the physical condition of the units.

That said, the decision to do a deal or not only makes sense in the context of available opportunities. For example, in my market (Atlanta) I can craft deals with a cash-on-cash return of 12-14%, so a 10.68% return is not as interesting. However, for someone currently earning 5%, this deal might be a gift from the heavens!