Advice on First Deal Numbers/Analysis

[Ian Livaich]

Hey everyone,

I am considering putting in my first offer on my first property wanted to get everyone's thoughts.  This is a duplex in a very desired area of South Jersey with easy train access to Philadelphia.  The duplex is a class B-/B property in a B+/A- area.  

All feedback is welcomed.  If some of my numbers are not realistic, please do not hesitate to let me know.  I appreciate your honesty in advance.

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OFFER SPECIFICS

• Listing price = $230,000
• Potential Offer = $175,000
• Expected renovation costs = $50,000
• ARV = $300,000 (this is a conservative estimate and could be closer to $325,000 depending on rehab level)

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INCOME

• 3 Bedrooms = $1,800/month (includes water and sewer in rent)
• 2 Bedrooms = $1,400/month (same utilities included)
• (1) 2 Car Garage = $0 (My agent says I could rent this for $150-250/month but I wanted to be conservative and exclude it)

TOTAL INCOME = $3,200/month or $38,400/year

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EXPENSES

• Taxes = $808/month
• Insurance = $110/month
• Utilities = $0 (built into rent but I am still exploring doing RUBS for water, sewer, and heat)
• Landscaping = $0 (built into rent)
• Capex (6.25%) = $200/month (I usually use 7-8% but lowered this because of the high rehab)
• Repairs (6.25%) = $200/month (same reasoning as capex)
• Vacancy (6%) = $192/month
• PM (8%) = $256/month (we will be self-managing)

TOTAL EXPENSES = approx. $1800/month

NOI = $1400

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MORTGAGE

• Lender will finance 70% of the purchase price, 100% of the rehab.  
• Finance Amount = $172,500 
• Downpayment = $52,500 
• Total Mortgage = $225,000
• Mortgage Payment = $1,034 (assuming 25-year amortization and a 5.25% interest as the property will be held by an LLC)

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CASH FLOW

• Approx. $366/month or $4,392/year with PM 
• Approx. $622/month or $7,464 without PM

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CoCROI

• Approx. 7.5% with PM cost included 
• Approx. 12.8% without PM cost included 

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Total ROI

• Approx. 13% with PM
• Approx. 18% without PM

If you made it this far, I appreciate your time and welcome all of your comments, suggestions, and feedback.