[Calc Review] Help me analyze this deal

[Adrienne Donner]

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There are already tenants in the place for another 10 months so no rehabbing now. This is at the asking price (without negotiations, yet). The down will come from a partner or private investor so maybe we can split the cashflow.

Would you pursue this deal?

[Tim Herman]

@Adrienne Donner There won't be any cash flow to split, if you consider all your costs. Your costs are on the low side,especially capex. Property management averages 10% or more. let's say everything is brand new. Capex: roof $15000 / 25 life span / 12 months = $50 per month. Flooring 2400 sf @ $6 sf = $14400 / 8 year life span / 12 months = $150 per month. Two items almost exceed your vacancy,repairs and capex budget. I use 23% for those 3 items. I look for properties that are close to the 1% rule. Monthly rent / .01 = max purchase price. So this property would need to sell for $175000 or rents would have to rise to $2300 per month.