Minneapolis Property Analysis - What Am I Doing Wrong?

[Jacob Siefkes]

Hi All,

New investor here. I live in NYC and have decided to begin my real estate investment career in the Twin Cities. Having gone to school there, I’m fairly familiar with the area and believe there is great opportunities to be had. I have been running property analysis on single and multi-family homes but my cash on cash returns seem to come out really high. I feel like there must be something I’m missing and am hoping more experienced investors could point out what it is:

Property Location - Minneapolis, MN

-Purchase price/asking - $130,000

-Down payment - $26,000

-Loan amount - $104,000

-Closing costs - $2,250

-Holding cost (2 months mortgage, taxes, repairs, cap ex) - $1,654

-Repairs - $10,000 (estimate)

-Total cost - $143,904

-Cash needed - $39,904

-Mortgage (4.5% - assumed) - $526.95

-Taxes (estimate) - $150

-Rent (estimate) - $1,500

-Insurance - $37.92

-Vacancy (5%) - $75

-Repairs & cap ex (10%) - $150

-Management (10%) - $150

-Total expense - $1,089.87

-Net - $410.13

-Annualized cash flow - $4,921.60

-Cash on cash return – 12.33%

The above is just one of 50 I have done but they all somewhat paint the same picture. Any help/guidance would be greatly appreciated!