First Deal analysis

[Daniel DiCosimo]

Hello BP community.

I am new to the forums and working on my first deal and would appreciate some feedback on my first deal analysis. Here is the summary:

- 2/1/1/1 4 plex

- Last sold in 2016 for 46,000

- Owner has put in $8332 for rehab since

- list price : 79,900

- last years rent total: $21,446

- last years expenses: $10,912 (this is not counting Safe Harbor expenses, I included those in rehab)

The place is by no means sparkling, some of the units have section 8 tenants, and it’s in a small town with population of around 1300. But is 17 miles from a town of 27,000.

I've run the numbers on my own and cash flow was close to the actuals ($6997 cash flow before taxes, 29.4% cash on cash ROI, cap rate of 13.88%).

My main concern is that I am paying over market value. It is being sold privately by the owner, who came up with the price based on its cash flow. I take zestimates with a grain of salt but it is currently around $56,000. Which somewhat aligns with the 46,000 + rehabs the current owner has done.

Please let me know your thoughts!

Dan

[Josh Brook]

@Daniel DiCosimo I think @Michael Noto makes a very good point about what you want in your first deal.

In addition, I've seen investors have better success on their first few deals when they are located closer to where they actually live rather than hours away or more. 

I also live in Minneapolis, I would just recommend patience. Really think through what you're trying to achieve and analyze everything through that lens.