How do others analyze this?

[Andrew Vogt]

I've very interested to see how all you veterans analyze a lead like the following one. I have my own way of qualifying and analyzing leads, but am interested to see how I "should" be doing it, or seeing another perspective.

I'm a landlord-I buy, "flip", and hold. I like to make sure I'm increasing my equity in everything I buy and make sure my properties cash flow around 30%.

I have a lead on a triplex asking $135,000; a studio apartment, a one bd/1bath and a 2 bd/1bath. He currently rents for $425, $525, $725=$1,625 and he pays all utilities. I'd say it is in a C condition. I'd say the FMV is around the $135k in my area for a triplex it's current condition.

My plan would be to purchase the property and invest another $20k into it to convert the triplex to: a studio, a 2bd/1bath and 3bd/1bath. I would be able to attain the rents of $500, $850, $1275= $2,625, I would still need to pay utilities (no proper separation). I think the FMV would become $170kish.

I'm on the fence with this deal-I believe my rough costs per month are roughly $1,900 (PITI=$1,350, Utilities=$450, Maint. Fund=$100) leaving a monthly cash flow of around 28%. I analyze everything very simply-perhaps even incorrectly.

But that is how I analyze a deal like this, mainly on cash flow and increase of equity (I don't really measure the increase, I just make sure I have some sort of increase). I'm really interested to see how everyone else analyzes real estate.

I'm sure someone will have other questions to ask to qualify this lead-please ask away, but in the end...

Deal or No Deal?