Rental Buy and Hold Analyze

[Yishi Pan]

Should I aim for more Cash on Cash ROI since it is my property or this would be a buy?

Will there be any other for see monthly expenses that I may not have taking into consideration?

Monthly Income: $2,200.00

Monthly Expenses: $1,815.61

Monthly Cash Flow: $384.39

NOI: $12,238.00

Total Cash Needed: $51,500.00

Cash on Cash ROI: 8.96%
 

Property Information

Purchase Price: $167,500.00

Purchase Closing Costs: $7,000.00

Estimated Repair Costs: $11,000.00

Total Cost of Project: $185,500.00

After Repair Value $200,000.00

Down Payment: $33,500.00

Loan Amount: $134,000.00

Loan Points: $0.00

Loan Fees:

Amortized Over: 25 years

Loan Interest Rate: 3.000%

Monthly P&I: $635.44

Vacancy $66.00 (3%) Repairs $110.00 (5%)
CapEx $176.00 (8%) Electricity $100.00 (5%)
Water & Sewer $100.00 (5%) Insurance $120.00 (5%)
Management $154.00 (7%) P&I $635.44 (29%)
Property Taxes $204.17 (9%) HWT Rental $25.00 (1%)
Heating $125.00 (6%)
Total $1,815.61 (83%)

Debt Coverage Ratio: 1.60

Appreciate your feed backs!

[Fedor Volkov]

Hi Yishi, 

This looks good, here are a few thoughts:

1. How confident are you on the rental income? 2.2k on a 200k ARV looks very good. Great if this is true, but always worth checking the rent comps more carefully. Is this a SFH?

2. 3% loan interest looks aggressive, I would budget 3.5%, have you been pre-approved to get a better estimate? 

3. Is this a SFH? Are the utilities metered? If metered, then tenants can be paying for electricity, heating and water and this shouldn't be your expense

Hope this helps

Cheers!

[Anthony Dooley]

@Yishi Pan If you spend $11,000 on repairs, there should be nothing budgeted monthly for Cap Ex or Repairs for the first year or so. The tenant should be paying the utilities, so your monthly expenses are extremely high. BTW, CAP Ex is a commercial property budgeting technique and not an actual monthly expense.

[Yishi Pan]

@Fedor Volkov

Thanks for the feed backs! really appreciate you taking the time to answer me questions.

I think 2.2k is a pretty Conservative estimate but not sure if this Pandemic will play into effect. Yes it is a SFH.

Heat source is using electricity, I may consider adding a separate meter for that and let the tenant each pay their own.

[Yishi Pan]

@Anthony Dooley

Thanks for the feed back! really appreciate you taking the time to give me some pointers. 

I Agree, most of my big repairs are in pretty good shape, maybe I can lower the repair cost and capex. 

That being said my $11,000 reno budget is mainly for repairs that are cosmetic like flooring; paint; tile and baseboards etc.