[Calc Review] Help me analyze this deal

[Justin Campbell]

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*This link comes directly from our calculators, based on information input by the member who posted.

Hello!

When you look at this report, does it look like a good deal to you? I appreciate your input and shared expertise!

[Account Closed]

Please don't jump on me if I give a Kindergarten analysis, but this seems REALLY thin. If all of your numbers are correct, then this is an excellent calculation because it would tell me to look elsewhere. Now, I will disclaim, I have yet to close my first deal, but we're actively in the market...I'm lining up lenders, etc. So I'm right behind you. My reasons...

1. 100K property, and you're calculating an ARV of 140K. How conservative is this 140? Could it be 170K, could it be 120K? Right away your refi doesn't right you. Now I don't think all cash out refinances should lead to profit, but I think most of them should. That's strike 1 for me, UNLESS the 140K is ultra-conservative or unless the Cash on Cash or CAP is excellent.

2. Cash on Cash and MCF. Whoa, that's one bad check from going the wrong direction. 3-4% Cash on Cash, I'll be honest I won't even look at something under 10, my wife won't even look at something I show her if its under 15%. What scares me about this, is just a lack of what someone called "Catch Up Power." What if in month 2 you need a septic system, or something unforeseeable happens. You'll have set aside your due diligence, which is great, but you'll have $72 of profit to pull from. Even if you're funded elsewhere, a new roof, driveway, furnace, etc, would TAKE YEARS to ROI if at all. If you went down 5K for a furnace it would take you take you over 11 years to break even at 36 bucks a month, not counting interest, or the fact that many HVAC units life expectancy is sub 10-15 years. Especially in green states. I'd want to ROI a CAPEX in a year or two so I'm not still on the hook for something should I decide I want out. People focus a lot on CAP, I like the CASH! Strike 2.

3. 45K in equity upon refinance. Don't hate that. Makes a HELOC really tempting, and I'm sure the bank would see me coming from a mile away offering my daughter all sorts of free suckers. Foul ball. You'll have very quickly increased your net by 45K against 10K start...it's just not very liquid is it.

I'll stop there because I just looked at page 2, now your property value estimates are VERY NICE. My focus is little bit more of monthly cash flow. On that priority, I'd walk.

Personally I feel that these type of investments can produce monthly as well as long term, time will tell if I am right.

Please don't take my thoughts anything other than professional critique were I looking at this property. By all means, community or @Justin Campbell straighten me out where I've gone off course.

If my logic is good anywhere, let me know that too so I can stick my tongue out at my wife when she's not looking.

Justin, best of luck man, I don't know California at all. Shoot me a message and let me know what you decide, I'd be anxious to learn.