Help analyzing a deal

[Scott Lyons]

Hi All,

First time poster here and brand new investor (zero purchases so far). Was hoping some could keep me honest on a property I'm looking at. Unfortunately I accidentally used up all my free BP calculations and just used a spreadsheet but was curious as to your all's thoughts. So far everything I've obtained is from the MLS. Numbers are annualized except where noted.

4 unit (2-2br; 2-1br) - Decent working class blue collar neighborhood - not nicest area but not the ghetto.

Est. Purchase Price: 179,550

Cash down: 35,910 (20% @ 4.5%) - not sure what rates are for rental properties.

Closing costs: 2,500

Current monthly rents: 2,505  

Vacancy: 5%

Repairs: 1,503 (estimated at 5% GOI)

Property Mgt: 3,006 (10% - though plan to do it myself to start)

Taxes: 5,875

Insurance: 1,000 (ballpark as I'm not sure typical insurance costs on rentals)

Utilities: ? (listing does not say if utilities are separated).

Based on above I calculated 

NOI: ~17k

Cap rate: 9.6%

Before tax cash flow: 6,274

2% rule: 1.4%

Cash on cash return: 16%

GRM: 5.97

Let me know if I'm missing some key data points to consider and whether at face value it seems like a good/bad deal.

[Account Closed]

@Scott Lyons

A couple of things that stand out to me.

1. Verify the down payment amount and interest rate your lending options are willing to prequal you on. Some may want more down, and 4.5% may be a bit low for this type of purchase.

2. Your closing costs may be a tiny bit higher. No big deal. Matter of a couple bucks.

3. Your vacancy estimate isn't LOW, but it's not exactly conservative either. You could leave this be depending on how good you think this property is/ your risk profile.

4. I think your repair estimate should be at least 10%.

5. Def factor in the PM even if you're doing it yourself.

6. Insurance might be a bit low based on the replacement value. Get a tentative quote. I like REI Guard (I'm not affiliated in any way).

7. Definitely figure out utilities. I end up paying sewer/water/garbage on this type of building often. It's usually pretty standard to find tenants paying gas/electric... but if there aren't 4 separate furnaces and/or separate meters you may end up paying some or all of the gas. Def. sort this part out on your analysis.

Hope this helps sir!