Talked to the local bank this morning about a SFR they had. In our convrsation, he stated they just got a Duplex back. Currently rents for 1050 with long term renters.
I ran priliminary numbers and it looks like a good deal. What do you all think?
The numbers are with the current rent which is about $100 per unit below the market in that area.
Leverage: 90% Marginal Tax Bracket: 35%
Appreciation: 2% Capital Gains Rate: 15%
Interest Rate: 6.00% Value of the Land: 20%
# of Units 2 Total Square Footage 1568
ARV after Rehab: $100,000
COMPARATIVE ANALYSIS
Price Per Square Foot $57.37
Price Per Unit $44,975
Gross Rent Multiplier 6.52
Cap Rat/ROA 7.97%
PURCHASE ANALYSIS
Purchase Price $89,950
Closing Costs 2.00% $1,799
Total Cost $91,749
First Mortgage 90.00% $80,955
Second Mortgage 0 $0
Down Payment $10,794
ANALYSIS OF FINANCING
Interest Rate 6.00% 0.50%
Term in Months (n) 360
Amount Borrowed (PV) $80,955
Balloon Payment (FV) $-
Monthly Payment (D) ($485.37)
FIRST YEAR OPERATING PROJECTION
Income/Expense
Net Rents $1,050.00 $12,600.00
Vacancies 5% $52.50 $630.00
Advertising $- $-
Cleaning & Maintenance $50.00 $600.00
Contingency $50.00 $600.00
Captial Improvements $- $-
Insurance $50.00 $600.00
Property Management 10.0% (self managed) $105.00 $1,260.00
Property Taxes $180.00 $2,160.00
Water, Sewer, Garbage $50.00 $600.00
TOTAL OPERATING EXPENSE $537.50 $6,450.00
NET OPERATING INCOME $512.50 $6,150.00
Mortgage Payment $(5,824.39)
Pre-tax Cash Flow $325.61
Tax Adjustments
Interest Payment on Mortgage $4,830.26
Depreciation (affects TI not CI) $71,960 80% of value/27.5 $2,616.73
Year 1 Taxable Income $(1,296.98)
Pre-tax Cash Flow $325.61
Tax Expense $453.94
NET CASH FLOW $779.55
CASH ON CASH RETURN YEAR 1 7.22%
My first thought is to Raise the rent to 575.That would bring cashflow up too 120 per month at 13.3%. At first glance is this a deal to go after?
Chad
