[Calc Review] Help me analyze this deal

[James Campbell]

Hey guys, I just started analyzing deals in Florida but the numbers seem too good to be true.. especially cash flow on this one. Can anyone spot an error in my analysis? The numbers are based on $10k off asking price, 3.5% down FHA live-in 4-plex, and $1,200/mo rent for each unit. Also the property is turn-key so I figured $1k repair costs per unit.

Thanks!

View report

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

[Tchaka Owen]

@James Campbell - here are a few comments and adjustments:

1. Your income is based on all 4 units rented; is this for future (or fair-market) calculations? I ask because since you're moving into one unit, you'll only be pulling in rents for 3 units. If you're not moving in, that changes a number of things including down payment and interest rate. If you say you're moving in and don't, that's mortgage fraud. FYI, the likelihood of a Smithfield, RI resident moving to that part of Riviera Beach is less likely than kissing every person in Bergamo and not catching Covid-19.

2. Change closing costs to $10,000.

3. Florida taxes are paid in arrears. The tax number you have is current and it rides out for the rest of the year. But next year you'll pay around $550/mo if you live there, and about $640/mo. if not.

4. Raise CapEx and Repairs to a minimum of 5% each. It would be wiser to put them at 7% each.

5. $150/mo might cover the bare minimum insurance. This is probably in a flood zone; safer to go with $250/mo.

6. It is my opinion that rents will be $1100, not $1200. Why? Because I'm a licensed agent and I just ran comps in the area. 

What you do now is take all this additional info and run the numbers again and see what comes up.

As an FYI, I (along with a partner) owned 9 properties less than 2 miles south in an area named Northwood and I'm decently familiar with the area. Though it's improving, I cannot say that I'd pay $420k for a 4-unit that doesn't even have central air and is right by MLK.