Deal Analysis - Buy & Hold - Wilm, DE

[Clay Mackinnon]

Hey Biggerpockets!

First time poster, longgggg time listener.  I just recently picked up my first property & am a real estate agent as well.  I am working w/ an investor in my market & he has a property he might be willing to sell.  I ran some numbers & wanted to hear other opinions.

So the property is in a pretty bad neighborhood.  However, it's pretty much turnkey w/ long term tenants in place who have no intention on leaving.  There are definitely some repairs I would like to do to the place but the tenant is happy as-is & does some maintenance himself. 

Owner is asking for 80k which is definitely over market value.  I'd say the comps go for around 60k give or take a little.  The income & cashflow numbers seem pretty good to me but there's really not much of an equity play here so I'm curious how that would affect your assessment of the deal as the #1 thing I hear is you make your money on the purchase.  I ran the numbers at 65k.

Purchase Price - $65,000

Rent - $995 ($11,940 Annual) GRM - 5.4

Op Expenses - $6,403  (Taxes $803, Ins $600, Maint $5000)  No management as I will self manage & no vacancy as it's already rented

NOI - $5,537

Cap Rate - 8%

Debt - 75% LTV @ 4% rate - $233

NIAF - $228    Est. Cash to Close - $23,000   Cash on Cash Return - 11.8%

As stated previously, not much of an opportunity for forced appreciation here, thanks in advance for your feedback!

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