Help analyzing a deal

[Chris Hansen]

Looking at this deal and was hoping to get some help from the BP community. 

4 duplexes with rents totaling $5000. Some month to month, some 1 year leases. 

So my numbers are:

Rent $5000

Expenses @10% $500

CapEx @10% $500

PM @10% $500

Vacancy @8% $400

Insurance $500

Taxes 6200/ year $520

Mortgage @5.25% $1573.78 with 380k purchase

That would put monthly cash flow at $506 and yearly at just over $6000

I would do individual leases for the properties assuming around 10k to close and 20% down. That would put me cash on cash of 14%. 

To me the cash flow per number of units sounds low, that’s only a cash flow of $50 a unit. Any help here?

[Nathan Platter]

Hi @Chris Hansen

• Capex seems rather high at 10%, should be closer to 3%
• Insurance also seems high at 10% try going with a percent of the ARV $380k should be $2,400/year)
• Taxes also seem a little high, but that's the market you're working with

I go for the 50% rule instead of itemizing everything, in that case it'd be $2500/month in expenses -> $2500 in net income, but then subtract off PI and you're closer to $900-$1000/month in profits. 

Go to the Tools section and check out the Renta Property calculator, it'll help find better percentages.

https://www.biggerpockets.com/buy-and-hold-calcula...