I recently found a property with my partner. It looks good but I’m wondering what you guys think about it. Don’t take it easy on me. Be honest and blunt.

** Property Description **

Address: Rapid City, SD

Type: House

Beds/Baths: 3/

Square Footage: 1,104

Year Built: 1953

Lot Size: 6,969 sq.ft.

** Purchase & Rehab **

Purchase Price: $117,000 ($106/sq.ft.)

After Repair Value: $165,000

Purchase Costs: $585

Rehab Costs: $11,286 (75% Financed)

Down Payment: $32,072

Total Cash Needed: $32,657

** Financing (Purchase) **

Loan Type: Amortizing

Loan Amount: $96,215

Loan to Cost (LTC): 75%

Loan to Value (LTV): 58.3%

Loan Term: 30 Years

Interest Rate: 5%

Monthly Payment: $517

** Holding Costs **

Holding Period: 2 Months

Loan Payments: $1,033

Recurring Costs: $414

Total Holding Costs: $1,447 ($724/month)

** Refinance **

Refinance Loan Amount: $123,750

Refinance Costs: -$4,950

Purchase Loan Repayment: -$95,983

Holding Costs: -$1,447

Refinance Cash Out: $21,370

Invested Cash: $32,657

Refinance Cash Out: -$21,370

Total Cash Invested: $11,286

** Financing (Refinance) **

Loan Type: Amortizing

Loan Amount: $123,750

Loan to Value (LTV): 75%

Loan Term: 30 Years

Interest Rate: 4%

Monthly Payment: $591

** Cash Flow (Monthly) **

Rent: $1,200

Other Income: $75

Vacancy: -$60 (5%)

Expenses: -$255 (21%)

NOI: $960

Loan Payments: -$591

Cash Flow: $369

** Returns & Ratios (Year 1) **

Cap Rate (Purchase Price): 9.8%

Cap Rate (Market Value): 7%

Cash on Cash Return: 39.3%

Return on Equity: 9.2%

Return on Investment: 277.6%

Internal Rate of Return: 277.6%

Rent to Value: 1%

Gross Rent Multiplier: 8.13

Equity Multiple: 3.78

Break Even Ratio: 70.5%

Debt Coverage Ratio: 1.62

Debt Yield: 9.3%

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