[Wilmington, DE Deal] Help me analyze this deal

[Levi Fleming]

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

[James Masotti]

Originally posted by @Levi Fleming:

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

 Overall your numbers aren't bad...you just have them in the wrong areas. 

Your vacancy is going to be 8-10%. Your capex and repairs are going to be closer to 10%. Water and electricity you shouldn't be paying for. If the current owner is paying them it likely means they aren't separately metered, which isn't surprising since according to the county tax records this property is not approved for a non-conforming use variance from the zoning board. As such I would check that the electrical and plumbing have been inspected and ask the owners to provide proof of their rental license. Wilmington zoning board is, generally speaking, not approving new variances, as such if you get caught with an unauthorized, illegal rental unit you could be fined and forced to convert this back to a single family (I've seen it happen to other investors). Not only will you have huge out of pocket expenses to do all the necessary renovations, but your rent will drop from $1400(according to the MLS listing) a month down to $950-$1000.

Oh...and in my opinion...you'd be crazy to take an investment with only a 6% planned CoC return. Especially in this neighborhood of Wilmington. If it was Trolley...maybe it would be worth it if you had nothing better to do with your money or at least exchanged the lower cash flow for fewer headaches as a result of a higher quality tenant base.