Please Help me analyze this deal

[Jason Appel]

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

Hi all, 

I found a deal in one of the markets I am researching. 

A few things I want to point out based on the numbers I inputted. 

1. my Loan Interest Rate of 4.25% is strictly an estimate, but I figure with the decreased rates right now (3.50%-4.00% as of last week).

2. Closing costs: I did $5,000. I'm not sure if thats too high/low, but any advice on calculating closing costs greatly appreciated.

3. I did a small repair cost of $1,500 because the description of the property tells us about the new windows, flooring, plumbing, electrical, water heaters, gas furnaces etc. 

4. The rent amounts I put in my analysis is based on the information I found on Redfin.com. It gave a breakdown of the exact monthly amount for each unit (3 units) and their lease expiration. 

EXPENSES:

$50 for garbage: How can I confirm a number on garbage?

$170 for Water and sewer: again, is there a website with public information on water usage and price? 

$85 for Insurance

5% for vacancy, 5% CapEx (reminder: 2016 renovation), and 5% repairs.

I did 10% for management, as I would likely be hiring a PM.

Please don't hesitate to give me HONEST advice on my numbers. I am learning and want to continue to learn the right way.

Thank you very much in advance.

stay safe and healthy during this time.

Jason

[Brandon Sok]

Hi @Jason Appel, it has the makings of a good deal. A couple of thoughts:

- The best way to figure out things like closing costs, interest rates, etc. is to get on the phone with lenders. I talked to 3 bankers today preparing for a refinance on a SFH and a duplex. It's beneficial for a couple of reasons: 1) networking connections, 2) Accurate picture of closing costs, and rates/requirements needed. Every lender is different. Today 1 bank was $250 closing costs but could only do 75% LTV whereas the other bank could do $2500 in closing costs and 80% LTV. Also, 1 lender referred me to the other.

- Don't trust what you read or hear with regards to current rent numbers. Ask to see the actual lease agreements. The duplex I'm buying the seller told me that rents were $650 each side. The reality was they were $550 each. That's $200 per month! Ken McElroy talks about this in his book, The ABC's of Real Estate Investing. (Great read btw!)

- It's excellent you included management and vacancy numbers. Again, call some management companies to get an accurate picture of the market.

Best of luck. Trust the numbers, not your emotion!