Updated almost 6 years ago on . Most recent reply
[Calc Review] Help me analyze this deal
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This is a duplex, 5% down with $7k estimated closing costs. I plan to do handyman/touch up repairs myself. That's why I put $1000 in repairs. I already have paints, etc. It's back in the market after 2 weeks, I think financing fell through on previous sales attempt. I am awaiting sales comps right now but it seems to check out for the area. The property is in demand. I would love to offer less than asking but I don't see why seller would accept my offer. What would you do about that? To make a strong offer agent advised we offer to pay title insurance cost and $250 option, 1% earnest. What do you think?
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@JayCinta Henry, my first concern is your rent expectations. The listing says that one unit is currently rented for $800, but you're assuming $2300. Are you sure that you can get $1150 for each side?
- I typically use 8% vacancy in my underwriting. This is super local and asset-class dependent. E.g. SFRs tend to run lower vacancy because they're often rented by families who want to stay put with kids, etc. Talk with local investors and property managers to get sense of vacancy rates for your area/asset class.
- What about water/sewer and lawn care? These are typically covered by the owner.
- Listing says "just needs a little love." That's probably going to be more than $1k in initial repairs.
You'll be very lucky if this cash flows at all. This would be a hard pass for me.