Just starting out...deal analysis guidance needed in Fresno, CA!

[Amy McBirney]

Hello,

My name is Amy and I am located in Fresno, California. I'm a veterinarian with an interest in finding my first rental property investment!! I've been listening to the Bigger Pockets podcasts and webinars for about 3 months now. And if there is one thing I've learned, it's that I need to analyze lots and lots of deals.

So my question is...am I analyzing this deal correctly? It seems with all the deals I've practiced analyzing so far that I'd have to purchase these properties for WELL below listing price (to a point where it seems unrealistic to expect to be able to find a seller willing to negotiate so low...)

Here it is: 2702 East Willis Ave, Fresno CA 93726

$179,900= Listing price (I ran the numbers at this price and came up with a negative cash flow. So I tries to play with the numbers to try to find a price that would work...

$110,000= price that I calculated to provide me with $160 monthly cash flow

Income: 

$1000/mo

Expenses:

Principal/interest $422

Property tax $188

Insurance $80

Vacancy $50

Repairs $50

Capital expenditures $50

TOTAL EXPENSES: $840

INCOME- EXPENSES = $1000-840= $160/month

Cash on cash return = 160 x 12/ 25000= 7.7%

To buy this property at $110,000 just seems almost impossible as homes around here have been going for listing price or above...so my question is a) is it possible? And b) am I running my numbers correctly?

Thank you so much for any feedback or advice you might have. I am so grateful for all the valuable learning resources  on BP made available to people like me, eager to learn but certainly new to it all!

[Account Closed]

Originally posted by @MarieChele Porter:

@Amy Mc I am new like you and I am looking to invest in Fresno as well and run into the same problem. What I've found is that the rents typically don't surpass the current mortgages and other expenses which makes it really hard (but not impossible). My strategy is to find something I can house hack whether it be a 2-4 unit or big enough sfh. After this I'll see if I can find any better deals if it's still proving to be too hard I will look for another area with better margins.

In Fresno it just seems as a whole unless you have a newer apt building the rents at some point stopped rising but the home prices did not. A lot of the deals I analyze are a 400k 4 plex that have rents at $500-600/month for each unit as if they haven't raised rents since they purchased years ago for 100k.

Anyways without continuing to go on and on a lot of rents are lower than they can be but not always by much. There are ways to find better deals but the number 1 thing is to keep analyzing as much as possible!

All so true. What I do like about Fresno is that it's super friendly about ADUs and JDUs. So, if you can only get into a SFR, and you can then convert the garage and add an ADU or JDU, turning it into a triplex, the numbers seem to be pretty good. Depends on the cost of the renovations/ADU hookups, etc. But, at least you're dealing with a local government that actually wants people to build them.

Fresno is one of the places I'm looking at investing next year, and this would be my plan.  Waiting to see if the prices come down in the next year.  The demand for housing appears to stay high, but time will tell.