Buy & Hold property analysis

[Ali Samana]

Hello,

I am not into buy and hold, but would like to get into it. Knowing that, I had a realtor call me about a possible deal he considers a good cash flow property. Here is the broad (numbers) overview.

The property is waterfront and its ARV is 180,000. The property can be picked up for 115,000. It needs a minimum of 25k in repairs (almost a complete gut out).

So, I would be out of pocket about 45k and have a mortgage of about 850 (guestimating PITI) and I would be able to rent it for 1600. Would you even consider this deal?

[Jon Holdman]

Do you mean a PITI payment of $850 or P&I of $850. Let me assume you mean P&I.

Rent: $1600
Expenses: $800 (50% rule, read in the Rental Property forum)
NOI: $800
P&I: $850
cash flow: -$50

Bzzzt. Not a good investment.

Now, if you mean $850 is PITI, and (guessing) P&I is $650, its better:

Cash flow: $150
Cash flow/year: $1800
cash on cash return: 4%

But, still a Bzzzt.