Analysis | Calc Review Assistance

[Derek Boxdell]

Hi Bigger Pockets!

I'm new to the investment world and figured it was about time I come with my hat in hand asking for some help from the community (I've lurked for long enough). I've been using the Rental/BRRRR calculator for a few weeks now and I've run into a patch of properties where the stated (from the listings) cap rates are in the 7-10% range but the numbers just don't add up. Before I start pulling my hair out, I want to make sure i'm using the calculators properly.

I've run into a few instances where the numbers look something similar to below for a 3/2 A | 3/2 B duplex. When I plug this into the calc while also accounting for 5% Maint, 5% Vacancy, 8% CapEx and $0 management (it's local)... I come up with negative cashflow.

Income & Expenses (Annual)

Gross Annual Income: $24,300 Insurance Expense: $1,440 Gross Annual Expenses: $2,120 Gross Inc Multp: 11.32 Net Annual Income: $22,180 Capitalization Rate: 8.07% Taxes: $3,761 List Price: $279,900

The above is what the listing gave me... using std 4-6% interest over 30 years I keep coming up negative. The operating expenses above though look awfully low for the year, almost as if vacancy, maint and Capex savings aren't accounted for.

Can anyone help set me straight... or is this actually a bad property (at its current list price)?

Thanks for the help!!!!

[David Cruice]

@Derek Boxdell, run your names through the Rental Property Calculator and submit a new forum post with a link to the analysis.  It will be a lot easier this way for people to provide you with feedback.  Your numbers are only giving half the story.  

P.S.  Welcome to the world of "the sellers numbers don't seem to make sense".  Most of them - especially the small mom and pop operates - tend to overstate income (If you raise rents you'll make this" and understate expenses by conveniently forgetting to include some of them.  Keep in mind that a low maintenance and repairs number can be a sign of deferred maintenance that you're going to have to pay for when you're the new owner!

[Derek Boxdell]

Thanks for the quick reply and heads up David... reposted, with a link to the calc.

Thanks again!!