Deal Analysis advice

[AJ Felix]

Analyzing a deal right now and wanted to get some input. The numbers are estimated to be accurate. This is a 4-plex that I am quite interested in in South Baton Rouge, LA. Anything that seems to be missing? Just keep checking and triple checking because cashflow seems pretty high. Property reported to be in good shape and fully occupied. All units renovated within the last 3 years. Just needs a new roof. Estimated to cost $5,000-$6,000. 

Purchase Price $205,000 asking and current market value

Closing Costs ~$7,000

20% Down Payment $41,000

Total Cash Needed $48,000

Financed Amount $157,000

Mortgage Mo $772.35

Property Taxes Mo $208

Property Ins Mo $208

Lawn Care Mo $87.50

Management Mo $260

Vacancy Mo $78

Maintenance Mo $167

Total Monthly $1,780.85

Monthly Rent $2,600

Monthly Cash Flow $819.15

Cap Rate 9.3%

IRR 20.74% (this is the return on your initial investment)

[Jónas Tryggvi Stefánsson]

@AJ Felix 

"I thought you have to buy properties at discount in order to make money."

Discount is a very subjective term. You need to buy in a way that makes sense. 

A lot of times the asking price is simply too high for the deal to make sense, that's when you seek a discount and attempt to negotiate the price down. It's easier when the property is distressed or its owners.

That being said, sometimes the sellers simply wants to sell fast and they are aware of the situation so you the discounted price is already structured into the asking price.

Finally, each market is simply different. What would be considered a good "deal" in one market could simply be the norm in another. Sure there are probably some implications that come along with it, such as "worse" neighborhoods, lower appreciation or more risk long term but this is all relative.