Case Study/Evaluation: Denver First Time Homebuyer Analysis

[Nick P.]

Bought my "First Home" about 6 months ago, and figured I would recalculate the numbers with the actual inputs (critique on calculations is encouraged). I bought this home before learning of BiggerPockets, but knowing the value real estate can provide to me. These numbers are slightly skewed as I did a 3% down conventional gift loan (local lender contributed 2% of down payment). Cash to close is so low because of earnest money credited towards closing and $2k back from the inspection. HOA recently increased from $300 to $350 sadly. Maintenance at $50 month based on HOA covering major repairs & me DIY.

Numbers based on hypothetical rents for the area.  I currently have a roommate splitting the mortgage (he pays $850/month), still debating to sell or refi/rent (based on diy repairs) when I am eligible for another personal residence loan.  Obviously cashflow is a bit low, mainly from my measly down payment.  

About the property:  2 br / 1 ba, 970 sq ft, in 10 unit condo complex, built early 1900's.  Neighborhood: Capitol Hill.  I felt comps in this area/condition were in the $270k-290k range.  

Critiques and questions are welcomed.  I am happy to share more info, pictures, etc.

Also to anyone without a full understanding of the numbers, don't let that cash on cash return (13.13%) let you think this would be a profitable investment based solely on the income from rent.  (you most certainly would lose money)

Purchase price	$245,000.00
Purchase Closing costs	$1,321.32
Repairs	$2,500.00
Holding Costs	$0.00
All Personal Contributions (down payment)	$7,500.00
Total Investment	$248,821.32
Total Loan Amount	$237,500.00
Number of units	1
Average Rent per unit	$1,800.00
Total Loan Amount	$237,500.00
Interest Rate	4.125%
Term Length of Loan ( in Months)	360
Interest Rate per month	0.0034375
Total monthly mortgage payment	$1,151.04
Monthly Insurance (PMI + Homeowners)	$113.73
Monthly Property Taxes	$103.16
Other Monthly Expenses (HOA, Utilities, Maintenance, Etc)	$400.00
Total Monthly Expenses (not with mortgage)	$616.89
Total Monthly Expenses (with mortgage)	$1,767.93
Other Monthly Income	50
Total Gross Monthly Income (Rent)	$1,850.00
Total Annual Expenses (not mortgage)	$7,402.68
Total Gross (Most Possible) Annual Income	$22,200.00
Net Operating Income ($ left to pay mortgage)	$14,797.32
Cap Rate (for multifamily/commercial)	7.00%
VALUE BASED ON CAP RATE	$211,390.29
Cashflow per month	$82.07
Annual cashflow average	$984.80
All Personal Cash Contributions	$7,500.00
Annual cashflow	$984.80
Annual “cash on cash” Return on Investment	13.13%