Proforma and Making First Purchase

[Cp Rahaim]

I am creating a proforma to analyze deals. I am looking to buy my first property and need some advice on metrics. Do you look for a certain cap rate? Cash on cash return? NOI? Appreciation? Also, do my numbers look out of whack? I use a lot of absolute numbers instead of percentages (e.g. Cap Ex at $30/unit/month). I'm looking in central MA and RI and primary goal is not to contribute cash after intial purchase. Finding it difficult to find anything too decent that give me a comfortable return? Any feedback would be appreciated. Thanks

[Christopher Phillips]

@Cp Rahaim

That's not a proforma. Proforma is an annual projection 3, 5, to 10 years out. Cap rates, NOI, proformas are more for commercial 5+ unit properties. 1-4 unit residential properties use the analysis you're doing showing cash on cash return and cash on cash ROI %.

You need to use %s for your reserves. Taxes, home insurance, mortgage (principle, interest, PMI), utilities, can be fixed numbers.

CapEx ~5% to 10%, Prop Mgmt 10%, Repairs ~5% to 10%, Vacancy ~5% to 10% The reserves will vary depending on the property/area.