All Forum Posts by: Haleigh N.

@Haleigh Nelson That's a very unique scenario that isn't easily translatable to the analyzer. I would just treat it value add project. I'm a little curious about some of your assumptions: 1) Vacancy at 3% is very low (5%-8% is more common), 2) 5% income and 0% expense growth aren't realistic - more common is to have the difference between your income and expense growth around 1%-2%, 3) Paying P&I during rehab isn't common - normally this is setup as an interest only period until the property is stabilized and then do a DSCR loan, 4) A proforma cap rate of 9.21% is very high for this type of property (this more of a cap rate for a Section 8 property). I'm estimating a cap rate of 7.0%-8.0%, and 5) (this isn't you, more the model itself) The future property value shouldn't be based an annual increase (3% in your version), but rather on an expected cap rate at exit. I've attached an image of my proforma based on your report and using a different property in the market.

Hi @Haleigh Nelson, welcome to the BP Forum! First thing, a purchase cap rate of nearly 10% on a $300k home that doesn't need much rehab seems VERY high. If this is a duplex and you'll only be renting out 1 side, I suspect your rent is only going to be $1,700, not $3,400, is that correct? There are several other items I have to comment on, but the rent/cap rate is the biggest issue, I believe.