1st Analysis in Phoenix; What do you think?

[Cosette Trantow]

Hi everyone, I hope y'all are doing well. I tried to analyze my first property today. I'm really not sure if I did it right because it seems like a really good deal (I'm not anywhere near ready to buy yet, just learning how to analyze). I'd like some feedback from those of you who invest here in the Phoenix area so that I know how off my numbers are. I live in Mesa and I tried to find rent comparisons for the area of the property (Alhambra) but there was nothing for rent there I could find. I kind of went with the general area and near what I pay for rent here.

This property is in the Alhambra Neighborhood of Phoenix AZ.

List price: $350,000

4 units: 3 x 2 bd/1.5ba 1 X 2bd/2ba

I figured $1100/mo for rent for the 3 1.5 baths and $1150 for the 2 bath

Total Income: $4450

I used Zillow and my assessor's website for tax info (although I have no idea what FCV and LPV are)

Tax: $95

Vacancy: $230 (5%)

Repairs: $230 (5%)

CAPEX: $230 (5%)

Property management: $450 (10%)

Mortgage: $1922 (using an FHA loan at 3.5%)

PMI: $280

Insurance: $70 (based on zillows numbers)

Total Expenses $3507

Cashflow: $4450- $3507 = $943

Down payment: $14000

Closing costs: $4000 (I definitely need help with this number)

Rehab: $10,000 (pulled this out of my butt, only 1 picture of the outside)

Total cash in: $28,000

Cashflow for the year= $11316

COC ROI= 40.4%

I'd just like a little help to figure out if I'm even in the ballpark or if I really need to make some big adjustments to my numbers. Any resources that I can use to understand some of these numbers better would also be appreciated.

Thank you so much for your time and input, I have a while before I can take action on anything, but I want to be able to analyze a deal in my sleep by the time I get there and be confident that I did it correctly. 

[Michael Pearse]

@Cosette Trantow Glad to help. Yes I definitely do those 5 steps while in the inspection phase. 

Sometimes I will have a contractor walk through the property before I even make an offer if I know I am seriously considering the deal. If you have worked with contractors in the past (eventually you will once you find a good team and have a couple of deals under your belt), they will be glad to give you estimates before you make an offer on a property. 

As you gain experience you will be able to complete most of the steps before even reaching out to make an offer. That knowledge will come with time. Don't be too cautious to get started. I spent hours analyzing deals and still made mistakes. Best thing to do is fail forward. Meaning that you accept that mistakes will be made, as they always happen when you are new. (It's like taking a math class, you probably won't get it right the first time. But after iteration and iteration you eventually see the patterns and prevent those mistakes from happening again.)  Get through the learning phase quickly and learn from your experience so that you can start to focus on making forward progress. 

Cheers!