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[Justin Grant]

Hey everyone, this is my 1st post so go easy on me.  

Looking to get my first deal soon on a single family house.  if you could help analyze my deal I would greatly appreciate it.  looking for a long term buy and hold.  

Property: small town north of  Austin TX

- My Offer: $145k

- 20% down ($29,000)  , 30 year fixed , 4.5% interest rate  ($116,000 loan).  

- Rent: $1550 per month

- Vacancy: 5% 

-Capex 6.5%

-Repairs 3%

- Water and Sewer and electric and trash and HOA: $0

- Insurance: $90 a month

- Property management: $155 per month

- Property tax: $375 a month

This leaves me at $166 cash flow per month , $1992 per year. There are a lot of assumptions going in there. This is a foreclouse and appears atleast 25% under market value at the price i'm offering and wouldnt need any significant repairs at this point.  Taxes are definitely high in Texas and the Austin area market is definitely hot which makes it harder to find deals.   I know it's smart to calculate property management but i'm going to manage myself.   If i removed property management from the calculations then I would be cash flowing at $4173 per year which seems more like more reasonable cash flow.  

Would you do this deal?  Am i missing anything or are any of my assumptions off base?

[Poem Turner]

@Justin Grant Just a couple of thoughts. 

1. The communities outside of Austin are great purchases; especially for cash-flowing rentals. Hutto homes appreciated at 9% last year. No, it's not the 17% that "downtown Austin" appreciated at, but the average sales price in Hutto was $220k-ish instead of $621k-ish, so consider what works for your budget.

2. Everyone has their own tolerances, but 6.5% CapEx + 3% for repairs seems high. With a foreclosure, budget in an amount to bring back up to speed, and you can probably bump your CapEx down by half.

3. Vacancy in those areas usually ranges from 4-8%, maybe higher depending on the time of year (now-March). Be sure and have one analysis for forecasting, but go back and see what the real numbers are after a year.

4. You will pay something for utilities while you're fixing it up, and while it's on the market. Maybe only a couple hundred dollars, but it does count. I don't know of many areas in Hutto that have no HOA, but if you've got one, awesome!

5. Insurance at $90/month sounds high on a property the type you're talking about. I strongly advise you to shop around. $650-700/yr or $55-60/month sounds more reasonable. I'm happy to share some names of agents with you if you want.

6. 10% property mgmt is absurd! I can connect you with a more reasonable place, or, honestly, you shouldn't be afraid to tackle it yourself. All you need is a phone and a few contacts. With one property, why pay someone to make a half dozen phone calls a year on your behalf?

Good luck!