[Calc Review] Help me analyze this deal

[Ken Swearengen]

This is a house hacking duplex deal in southern PA. It's got a big yard and good schools for my kids, but I want to make sure it makes good business sense. In order to make the numbers work from me I would have to get $5k off the asking price of $267900 and raise rents to market which would be $100 per month per unit (that's what this report is based off of). My big question: are those things doable in today's rental and real estate market? The community is small town (suburb of York PA/Baltimore MD) so I'm not sure how accurate the Rentometer numbers are.

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

[Trent Stone]

You'll want to make sure the deal will work and look good as is. Don't buy a mediocre deal and hope to make it good. Buy a good deal and make it great. Talk to several local PM's in the area and get there input about what is realistic. So run your first report with ACTUAL data(not just what the seller tells you), and then run another report AFTER you get all the data from your PM's.

I would fix your loan interest rate. For investment properties your loan will generally be a point higher than current traditional mortgage rates. Get an actual quote from a loan broker. Also, unless this property was JUST rehabbed, I would raise your capex and repair cost probably closer to 10% each. Be conservative with your numbers, if they turn out better then groovy. But you'd hate to see 2 years profit wiped out by a new roof or something. Your cap rate also depends on your neighborhood. If you can get this property to perform at a 6 cap and you are in a B-A hood, then probably good, if you are in a C-D, then I think you are asking for a lot more headache than it's worth. You are already a little short on the 1% rule, and once you tighten your numbers I don't think this is gonna be a great deal. I'm not saying don't go for it, but at first look, you will need to come down much more than $5,000. Be very realistic with your numbers and make a good argument to the seller about your offer. I would absolutely argue that with the uncertainty in the market right now that you need them to work with you. I think you'll be fine going forward, but use it as a bargaining chip right now.

Good Luck!!!