Deal analysis on a turnkey property in Indianapolis IN

[Kunal Lakhwani]

Purchase price: $152,000

20% down: $30,400

Closing costs: $2500

Monthly rent: $1295

Monthly cash flow: $250 (after mortgage payment, property taxes, insurance, 5% vacancy, 5% repairs and maintenance, 5% capEx)

Looks like a good deal to me. Since this is my first ever real estate investment, looking for another set of eyes to look at this, and an expert opinion.

[Scott Passman]

I agree with @Ric Ernst.  Looking at your spreadsheet, you said you accounted for cap ex but I don't see it on the sheet.  You have "repairs and maintenance" listed but that is separate from cap ex.  In addition, it is highly unlikely that 5% of gross rents budgeted will cover your repair expenses, and unless it's new construction definitely not cap ex. If this is an older property (built >40 years ago) you'd be surprised how quickly repairs add up and $65/month isn't going to get you very far to cover them. Other things to take into consideration are that PM companies will generally charge a leasing fee of 1/2 to 1 months rent and often charge some type of releasing fee annually as well which really eats away at profits.  In regards to property taxes, if this property was last owned by an owner occupant then you need to consider that the homestead exemption on the taxes will go away as a non-occupying owner and your tax rate will increase as a result so factor in a bump in property taxes.   Based on the info I'd be surprised if this property cash flowed much, if at all, over the next few years.  I own a property in Plainfield with a 105k loan and $1250 rent and it is basically breaking even now because of the repeated maintenance needs.