[Calc Review] Help me analyze this deal

[Kavin Kuykendall]

Hello BP! I'm asking for help on this analysis. Anything I overlooked? I am very new to analyzing deals so please, correct me where I'm wrong.

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

Thank you!

Kavin

[Tony Wooldridge]

@Kavin Kuykendall, I want to commend you on putting in the work to make your REI dream become a reality. I see you are putting in the work to analyze deals and make this happen, once again GR8 job and keep after it. With that said, may I ask you a couple of questions about some of your #'s (?) How did you come about the $1000 a month per unit? It also appears that your insurance payment ($36 (2%)) may be slightly low. However, it looks like the rest of your numbers are fairly solid. If you haven't already done so, I might recommend making contact with a local PM to get real time #'s as they relate to the WW duplex rental community and more specifically in this neighborhood. Keep me posted on how things are going! Here is to wishing you best of luck in your 2019 REI ventures!

[Walter Williams]

@Kavin Kuykendall, I like the analysis you have done. How sure are you of your repair costs? Have you gotten contractor quotes or is this your independent estimation?

[Kavin Kuykendall]

@Tony Wooldridge @Walter Williams I'll admit I'm not great at finding solid, accurate expense numbers yet. I used Windermere Real Estate's (a large PM for the Walla Walla area) current online rental listings and found similar duplexs' for rent. These units seem to be averaging $1000 fully renovated (nice yards, interiors, etc.). The listing says the current income generated by the property is $19200 annually ($800 per month per unit). I believe with some cosmetic cleanup and light renovation the rent could be increased.

The insurance is solely based on the "estimated insurance" given on Realtor.com. So it as well could be completely off. I seem to remember @Brandon Turner saying he found this number to be accurate enough to run the first analysis.

Again, my rehab estimates are my own; no contractor or deep inspection. I am a bit confused as to when exactly a contractor is introduced in the process. Forgive my lack of knowledge, but when can I legally bring an inspector or contractor onto the property? After I make an accepted offer? During a showing? 

I've been reading a ton and listening to the BP Podcasts daily, but without the hands on experience my confidence just isn't there yet. I really just want to get a deal under my belt as I know it will teach me more than anything. 

I am also setting up meetings with several investors and realtors in the area to start learning from the people already in the game.

Thanks

[Dennis M.]

I suspect your 600$ cashflow is wishful thinking on this one . Your numbers seem awfully generous .

[Kavin Kuykendall]

@Dennis M. I thought it seemed crazy so I figured I must be off somewhere. I just don’t have the experience yet to see where. Any suggestions on getting contractor bids and an inspection? Thanks

[Steven N.]

Looks good but maybe I missed something... I dont get how youd only put 5k down (are you living in the property) and how youd get a 5% rate? 

[Kavin Kuykendall]

@Steven N. It's a private loan with the owner of the company I currently work for. So its the terms we agreed to.

Thanks for the comment.

[Tony Wooldridge]

@Kavin Kuykendall, it appears that you have the concept of running the #'s down.  The more you do it the better you will become like anything else.  No need to apologize for the lack of knowledge as that is the beauty of why BP is so powerful.  Draw on others knowledge base to help you over time develop your own.  When you make an offer and put in your earnest money, you will be given a inspection period (due diligence) to have contractors and inspectors come in and address the known (and through the inspections unknown things as well) concerns/projects that you want to take care with the given property.  This inspection period can be negotiated as far as the time needed depending on the condition of the property.  For example if it is a value add and the property is in poor shape you may want to ask for a little bit more time to get bids and inspections done.  A newer more turn key place might not need as much time.  I recommend always have an inspection done.  There is ALWAYS things in a home that you will not anticipate.  By getting an inspection (it doesn't guarantee you will find and see everything) it will  help to eliminate a good majority of things you wouldn't know if you didn't get one.  

If after you have your inspections / contractors come in and they don't find anything unexpected and the bid is doable, then you might go back and close on the property.  However, if in doing the inspections / contractors come back with some unforeseen hidden HUGE cost you could back out of the purchase.  But make sure that your offer has the language that allows for you to get out of the deal and still get your earnest money back in the event financing/unforeseen high cost of something wasn't anticipated.  

A GR8 book to look into is J Scott "Estimating Rehab cost" it goes into extreme detail about how to come up with a fairly good # for repairs.  I believe that he just revised it with updated prices in today's market.  Anyway hope this helps.  I will be looking forward to the opportunity to meet up sometime.    

[Kevin Gallagher]

@Tony Wooldridge I’m pretty new so I’m basing this post mostly on what I’ve read.

I would suggest looking at Brandon’s book on rental properties to hone in on a more realistic cap ex number. 100 per month allowance seems low considering you will be caring for two units. I know there are probably some shared cap ex items (i.e roof) but you will have 2x the cost on interior paint, carpet, appliances, HVAC since there are two units.

Even with beefing those numbers up a bit, I’d say this looks like a nice find!

[Mike D'Arrigo]

Originally posted by @Kavin Kuykendall:

@Steven N. It's a private loan with the owner of the company I currently work for. So its the terms we agreed to.

Thanks for the comment.

 Those are great terms.