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Updated almost 7 years ago,

User Stats

46
Posts
16
Votes
Chris P.
  • Beulah, MI
16
Votes |
46
Posts

To pull the trigger or not

Chris P.
  • Beulah, MI
Posted

I am looking at a set of two properties located next to each other. One is a 3 bed 2 bath renting for $855. the second is a duplex property with two 2/1 configurations renting for a combined rate of $1280. I found a lender that will loan 75% of the purchase price, and I could make the deal work, but It would eat up most of my capital reserves. I pulled the property tax assessments from Zillow and they are 11,800 and 16,000 respectively. I am no expert in valuations or appraisals so any help here would be great. The rental amounts are from the current leases.

$2,135.00MONTHLY INCOME

$1,694.08MONTHLY EXPENSES

$440.92MONTHLY CASHFLOW

14.08%PRO FORMA CAP

$9,853.40NOI

$22,125.00TOTAL CASH NEEDED

23.91%CASH ON CASH ROI

13.59%PURCHASE CAP RATE

ExpensesIncome50% Rule
Total operating expenses:Mortgage expenses:
Vacancy:$170.80Repairs:$213.50
CapEx:$106.75Electricity:$50.00
Water & Sewer:$162.00Insurance:$120.00
Management:$213.50P&I:$380.20
Property Taxes:$277.33
$72,500PURCHASE PRICE
Purchase Closing Costs$2,000.00
Estimated Repairs$2,000.00
Total Project Cost$76,500.00
After Repair Value$70,000.00
Down Payment$18,125.00
Loan Amount$54,375.00
Loan Points$0.00
Amortized Over30 years
Loan Interest Rate7.500%
Monthly P&I$380.20
Total Cash Needed$22,125.00

Financial Info

2.79%2% RULE $15,625.00TOTAL INITIAL EQUITY

2.83GROSS RENT MULTIPLIER

2.16DEBT COVERAGE RATIO

Analysis Over Time

3% /yearEXPENSE INCREASE

3% /yearINCOME INCREASE

2% /yearPROPERTY VALUE INCREASE

Year 1Year 2Year 5Year 10Year 15Year 20Year 30
Total Annual Income$25,620.00$26,388.60$28,835.54$33,428.29$38,752.55$44,924.83$60,375.21
Total Annual Expenses
Operating Expenses
Mortgage Payment
$20,328.97
$15,766.60
$4,562.37
$20,801.97
$16,239.60
$4,562.37
$22,307.82
$17,745.45
$4,562.37
$25,134.21
$20,571.84
$4,562.37
$28,410.77
$23,848.40
$4,562.37
$32,209.20
$27,646.83
$4,562.37
$41,717.40
$37,155.03
$4,562.37
Total Annual Cashflow$5,291.03$5,586.63$6,527.71$8,294.08$10,341.78$12,715.62$18,657.81
Cash on Cash ROI23.91%25.25%29.50%37.49%46.74%57.47%84.33%
Property Value$71,400.00$72,828.00$77,285.66$85,329.61$94,210.78$104,016.32$126,795.31
Equity$17,526.25$19,494.41$25,837.43$38,134.84$53,197.53$71,986.64$126,795.31
Loan Balance$53,873.75$53,333.59$51,448.23$47,194.77$41,013.25$32,029.67$0.00
Total Profit if Sold *-$1,449.73$6,062.22$30,895.02$80,784.39$143,073.13$220,258.21$432,774.81
Annualized Total Return-6.55%12.87%19.10%16.62%14.34%12.71%10.60%

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