All Forum Posts by: Troy Marschall

Hey Kristen,

I would definitely do an in-depth ARV analysis and then have funds aside for improvements if the market can handle the forced appreciation. I say this to help you get a larger return in the future and help command larger rent sums. Overall, I think it is a solid deal, especially if you can keep expenses below the 50% threshold.

V/R

Hey @TysonLee,

There are a lot of aspects to a deal besides just the numbers, i.e., market analysis, what can the market withstand in rents, is the property value add if so how much can you afford to renovate - what would be the strategy of the renovations, and what is your overall investment strategy (Buy/Flip, buy/hold, BRRRR). I would also like to know what did you get when you ran the numbers, what were your inputs for your analysis?

Few things I noticed right away: 50% of the units are month to month - could lead to high turnover and vacancy. Only $250 in reserves, should have at least $4,500 (250/door, and if the property is older, 1964, you may want to consider more). They are paying 6.35% in PM fees, can you get that same rate? Have you compared?

When I do my analysis, I always use the numbers that the property is currently doing, never what they will do. I only consider rental income: $80,533.57. Expenses automatically to 50%, because assume that you cannot run the property any better than what the current owner is doing, and it being your first property there will probably be some hiccups. Interest rate, I am going to use 5%.

This is my quick analysis:

Rent Income: $80,533.57

Expenses (50%): -$40,266.59

DSYR: -$26,400

Cash Flow: $13,866.59

CoC: 11%

*Note: This did not include closing costs, an increase in the reserves or taxes which I do not believe were on there. 

*An area of possible opportunity, notice in the expenses that the owner is paying utilities.

Hope this helps! 

V/R

Huntsville, AL - FBI relocating 5,000 agents over the next 10 years, minor league baseball team coming, google building a data hub. You have U of AL @ Huntsville. Space program, military, military contracting. Great value add city.