Help Analyzing SFR for Buy and Hold

[David Wolfe]

Hi all,

I'm currently analyzing a SFR to purchase as a buy and hold with the goal of long term cash flow. Property is 1600 sq ft, 4br/1.5ba built around 1920. No garage or off street parking. Currently rented month to month. No immediate repairs needed to be rent ready. New furnace in the last year. I'm not too familiar with rating neighborhoods, but I'll say this is a C+. Its plenty safe, but would not be my first choice to live in.

Here are the numbers:

Potential offer price $70k

20% down = $14k + $2k cc= $16k

Rent: currently rented at $1000/mo but the market should easily support $1,100

Vacancy: 8% = $88/ mo

Insurance: $500/yr = $42/mo

Taxes: $2850/yr = $238

R&M: $88/mo????

Capex: $88/mo???

PM: I would manage myself but building in 10% just in case = $110/mo

Utilities and lawn/snow to be tenants responsibility

NOI $446

Debt service $284

Cash flow $162 =12.2% COCR

Not sure how to get a better idea of r&m/capex...are my estimates too conservative? Would you go after this deal or wait for the next one?  This would be my second buy and hold.  Admittedly the numbers aren't as good as my first, but the local market seems to have changed making good deals harder to come by.  Let me know what you think!

Thanks!

[Edward B.]

@David Wolfe, everyone likes to tout their home runs, but in reality very few people hit home runs on their first, second, or even twentieth at bat. Focus on singles and doubles and the home runs will come. Usually when you least expect it and probably on a deal that you thought was going to be a single. The people who have the most at bats tend to have the most home runs as well, so the more deals you do the greater your chance of knocking one out of the park. Just don't strike out. Man, I love sports analogies.