[Calc Review] Help me analyze this deal in Orlando

[Keleisha Carter]

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

Good deal or bad deal?

Original asking price is $130,000. It needs minimal work, just repainting and renovating the main bathroom. If I rent out this property to a single family this deal will work out. My vacancy rate is low as based on my research, properties stay on the market for 30-40 days on average. It's a townhome so my repairs & maintenance is really low, likewise my Cap Exp.

If I decide to rent this out to students, then it would be different as I would have to budget for electricity in the rent for students.

Thoughts?

[Jaysen Medhurst]

@Keleisha Carter, I'm not following how you arrived at your vacancy rate? It's really more about turnover. On average tenants stay for ~2 years, factor in 1 month for turnover and 1 month for the lease-up fee and you're at an 8% vacancy rate. This is super local, of course, and could be only 4% in your area. Just make sure you're getting the right data.

Don't expect to actually add $15k of value with $10k of reno. You'll probably add little or no actual value with such a small amount of work.

While $260/month cash flow is pretty darn good for a single unit, your CoC ROI is okay at best. I shoot for mid teens or better. It's really the HOA that's killing you. You're trading slightly lower repairs/CapEx (5% of GSR) for a much higher HOA fee. You're essentially surrendering ~10% of GSR each month for very little in return.

I'm nervous about condos overall because of the HOA and restrictions. One special assessment could wipe out months or years of cash flow. HOA fees can go up and you'll have no recourse. What are the finances like? Have you confirmed that this complex allows rentals? Some only allow a certain percentage of units to be rentals and/or limit the length of time they can be rentals (e.g. 1 or 2 years total).