All Forum Posts by: Brandon Harkins

Agree with Isaac. Why are you putting in money on a property that is already maxed out in a crappy state? There is no upside. We also need more information.

What are your criteria? That is ALL that matters. You need to know what they are to know if your deal works.

For criteria you should know, by heart:

COC

Monthly cashflow (After factoring in CapEx, Vacancy, Repairs, and Prop Mgmt)

and in this case rehab budget/scope of work.

After applying your criteria for those categories against what the numbers are showing you will know if this is a good deal or not. I wouldn't do the deal unless there was significant cashflow, since it's already at the high end for market rents. All the money I would be dumbing into it would not bring me in more money so I would find one I could BRRRR instead. But that is just me. Without knowing your criteria there is no way to evaluate this deal fairly and correctly.

As someone with little experience, 15% COC is my goal. I’m buy and hold and only care about cash flow. Repairs would be aimed at improvement for the sake of improvement (good house helps bring in good tenants) and possibly turning it into section 8 in the future. No property manager and I can do the majority of the repair work. Vacancy rate isn’t an issue. The numbers I put in assume 8k for repairs, but I haven’t had the chance to dig deeper into the cost yet. If an inspection yields anything major (rotted floor joist, foundation damage, extensive subfloor, major electrical) I wouldn’t do it. My other property is similar and cash flows $440/month. I would expect this one to do around the same with the current info I have, but I’m also new at this and know that I may be very mistaken or missing some issues, especially since it’s an older house.

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Quote from @Jorge Sosa:

Could you explain your numbers? How are you getting 17% CoC if is not a cash deal? Not putting you on the spot at all I am just learning and want to make sure I understand.

I ran some numbers with the info you gave and the only way I get that 17% CoC is if it is a cash deal. Ofc I might be missing a lot of the information you have.

I just used an ROI calculator with a few rough estimates. Altogether I’m estimating around 20k cash on the highest end, but I’m now thinking it would be better to spread the nonessential repairs out and cover them with income from the rental, since it will cash flow day 1.

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Quote from @Issac San Miguel:

I’m confused on the logic here. If it rents for $875 in the condition it is in, why make repairs at all?

Is there a tenant in place?

To prevent future problems and for it to be a decent place to live. There is a tenant in place, but I don’t want to be the landlord with sinking floors and rotted wood around the house. I would also plan to section 8 it at some point, because I can get higher rents from it in my area, so it would have to pass inspection.

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Quote from @Matthew Tyson:

Quote from @Issac San Miguel:

Quote from @Brandon Harkins:

This is my first post. I have one rental that my fiancé use to live in. I’m currently looking at a second.

House: 3b1b 1070sf house built in 1940

Listed price: $62500

It's currently rents for $875/month and needs several repairs. There are multiple soft spots in the floor, minor ceiling damage throughout, shower/tub kit likely needs replaced, areas of rotted wood on the outside, old floor furnace needs properly sealed, and the carpet needs ripped up and replaced. It hasn't been inspected, but will be before I buy it. Cash flow is the main goal. With some quick math I'm looking at around 17% cash on cash ROI. Any input on if this is a good deal or any red flags I should be looking for?

Any help is appreciated. Thanks

I'm assuming the CoC return is due to a cash sale. A lot more info is needed though. Do you want to BRRRR this property? What's the ARV? What do you estimate repairs to cost? What will be the market rent once repairs are complete? Is it tenant occupied? Are they vacating? Have you seen a rent roll?

Only cash I'm putting down is for the down payment and repair cost. No plans to BRRRR or sell, so I haven't looked at ARV. Plan is to buy and hold. Rough estimates for repairs 5-7k, but I could see it being higher, especially with floor joist are rotted, which may kill the deal. Repairs won't change market rent. $875 is high where I live. I just want the place to be respectable and prevent further issues. It's tenant occupied. They seem good. It's a small family and they've taken care of the property on their side, so I'm not concerned about them. I haven't seen rent roll, but that and the lease will be a requirement for me to enter an offer.

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I only plan on paying cash for the down payment and repairs. It’ll be 15% down. Repairs I’m estimating (very roughly) at around 5-7k.

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This is my first post. I have one rental that my fiancé use to live in. I’m currently looking at a second.

House: 3b1b 1070sf house built in 1940

Listed price: $62500

Any help is appreciated. Thanks

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All Forum Posts by: Brandon Harkins

Brandon Harkins has started 1 posts and replied 6 times.

Post: Need help analyzing a deal

Post: Need help analyzing a deal

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