My second deal. Should I do it?

[Alejandro Arreola]

Hey bigger pockets family. I desperately need some advice. I’m currently working on my second deal. I’m looking to buy a package deal, which includes a single-family house mechanic shop and a duplex which are all vacant and need substantial repairs. The set price is 85,000 for the whole package deal. I’m also thinking of putting down 20%. With this deal, I want more then 15% cash on cash on my investment. I locked in a 3.5 interest rate for a 15-year mortgage. I was also thinking of trying my best to pay this off in 4 years. But here are the numbers.

Monthly mortgage payments: 1,624 that includes taxes and insurance.

Expenses per year

Utilities: $3,000

Taxes: $7,000

Estimate repairs for investment: $30,000

Estimate insurance: $7,000

Total expenses: $47,000

My rent rolls are based on market rents.

Single family house: $750

Duplex:

Unit one $750

Unit two $750

Mechanic shop rent: $1,000

Vacancy rates: 7%

Total a year: 36,270

Now my question is, is the seller asking for too much? Is this property going to cash on cash return me more than 15%? I'm entering my second deal, and I don't want to get burnt. And I also found another property similar; their asking price is 200,000. If I missed a number or if I sound like a rookie, please excuse me. Much appreciation for your advice.

[Guifre Mora]

Originally posted by @Alejandro Arreola:

@Guifre Mora wow 3.72 cash very low. But yes roughly 3k for closing cost. Thank you so much.

 But actual cash flow is not measured in a percent. Would 100,000 a month be worth the investment meant if its 1.72% of the cash invested? Your COCROI is 26% with the rehab included.