Insight on my first deal

[Sam Wydner]

Hello all,

Hope everyone is having a great new year!

Ive closed on my first deal and would love to get some feedback or even constructive criticism on my own analysis.

Thanks in advance!

Gross Monthly Operating Income	1,300.00
Monthly Operating Expenses
Property Management Fees	104.00
Repairs and Maintenance	-
Real Estate Taxes	1.90
Rental Property Insurance	112.50
Homeowners/Property Association Fees	35.00
Replacement Reserve	-
Utilities	-
Pest Control	-
Accounting and Legal	-
Monthly Operating Expenses	253.40
Net Operating Income (NOI)
Total Annual Operating Income	15,600.00
Total Annual Operating Expense	3,040.80
Annual Net Operating Income	12,559.20
Capitalization Rate and Valuation
Desired Capitalization Rate
Property Valuation (Offer Price)	148,000.00
Actual Purchase Price	145,000.00
Actual Capitalization Rate	8.66%
Loan Information
Down Payment	29,000.00
Loan Amount	116,000.00
Acquisition Costs and Loan Fees	2,264.00
Length of Mortgage (years)	30
Annual Interest Rate	5.125%
Initial Investment	31,264.00
Monthly Mortgage Payment (PI)	631.60
Annual Interest	5,906.06
Annual Principal	1,673.20
Total Annual Debt Service	7,579.26
Cash Flow and ROI
Total Monthly Cash Flow (before taxes)	415.00
Total Annual Cash Flow (before taxes)	4,979.94
Cash on Cash Return (ROI)	15.93%

[Candace Ellison]

Originally posted by @Derek Kirkwood:

@Sam Wydner

Ok, what is the assessed value that you pay the 1.9% on?  I'm trying to figure out what you actually pay for taxes because in your numbers above its just literally adding $1.90 monthly expense for taxes.  If you had not done this already you can go to the county tax website to see how much taxes will be.  Sometimes sites like zillow or redfin have the tax history too.

Obviously the maintenance and capex depends on a lot, like the market, condition of property, etc.  If you have any big expenses coming up that you know about, for example the inspector determined the roof will need to be replaced soon then you can start saving specifically for those.  To use very generic numbers for analysis you could do 5% for each.  Same with vacancy, it depends, but a lot of people use 8.3% because thats 1 month out of every year.  With 10% for maintenance/capex, 8.3% vacancy, and $2755/yr taxes (assuming the assessed value is same as you paid 145k) it looks like this will be negative cash flow.

 I have always used 5% for vacancy and capex. I like the idea of using 8.3%. Definitely will start analyzing my deals this way.