The numbers did not look to add up to be a profitable rental -- with $2,200 monthly payment-- $1419 P&I (I estimated this at 4.5% for a business loan, hopefully this # is not too low), $67 insurance, a staggering $715 in taxes (2.248% interest per year).

This would be my first deal and I'm giving myself a lot of conservative help in terms of profit estimates.

We estimate at 3 units the value just isn't there to warrant all that work.Any help would be greatly appreciated!

If we were to rent out the front house that we currently live in, I would estimate it to be about $3500 or more for it, since it was remodeled, and it looks great.Analysis:So I did the math (high level) using 2 different scenarios.Scenario 1: If both the houses were rented.Property/Deal ProfileGeneral GuidelinesPurchase Price700,0001 Percent Rule (%)0.857142857Down Payment (%)3.50%50 Percent Rule3000Down Payment ($)24500Cap Rate8.214857143Interest4%Cash-on-Cash Return26.73744578Term (years)30Loan amount687,321IncomeCash FlowRental Income 12500Total Monthly Income6000Rental Income 23500Total Monthly Expenses5075.33Laundry IncomeStorage IncomeMisc IncomeTotal Monthly Cash Flow924.67Total Monthly Income6,000Total Annual Cash Flow11096.04ExpensesCash-on-Cash ReturnTaxes750Down Payment24500Insurance58Closing Costs0Water/SewerRehab Budget30000GarbageMisc Other-13000ElectricGasTotal Investment41500HOA FeesLawn/SnowVacancy200Repairs200CapExProperty Mgmt.Mortgage Insurance Premium586.33Mortgage3281Total Monthly Expenses5,075.33Cash-on-Cash Return26.73744578 Based on the above analysis, here are the key takeaways – 1)The property cash flows - $924/month 2)Cash on cash return is 26% which is pretty good in LA I reckon.3)The main thing I would like to note is the solid Cap Rate of 8.2Scenario 2: The actual scenario with only one rental income since we moved into the front house.Property/Deal ProfileGeneral GuidelinesPurchase Price700,0001 Percent Rule (%)0.357142857Down Payment (%)3.50%50 Percent Rule1250Down Payment ($)24500Cap Rate2.214857143Interest4%Cash-on-Cash Return-74.46737349Term (years)30Loan Amount687321IncomeCash FlowRental Income 12500Total Monthly Income2500Rental Income 20Total Monthly Expenses5075.33Laundry IncomeStorage IncomeMisc IncomeTotal Monthly Cash Flow-2575.33Total Monthly Income2500Total Annual Cash Flow-30903.96ExpensesCash-on-Cash ReturnTaxes750Down Payment24500Insurance58Closing Costs0Water/SewerRehab Budget30000GarbageMisc Other-13000ElectricGasTotal Investment41500HOA FeesLawn/SnowVacancy200Repairs200CapExProperty Mgmt.Mortgage Insurance Premium586.33Mortgage3281Total Monthly Expenses5075.33Cash-on-Cash Return-74.46737349In the actual scenario, I am paying $2575 every month towards the house.

Tell them you need to walk through the home and work up a listing price estimate.

They agreeing to findings.2. complete repairs found by inspection and deduct from deposit3. clean carpet if they don't provide a receipt from a local, professional cleaner which is the condition they received it in. deduct from deposit if they didn't.4. if a pet was allowed, they must turn in a receipt showing it was treated for fleas. if If they dont it comes out of the deposit. if any damage from pet they're given an estimate of repair and sign an agreement that they will pay any excess not covered by deposit.5. touch up painting as needed, filters changed, fire alarm batteries updated.6. get keys from tenant and change locks. old locks go into inventory to be used in other properties.7. return their deposit with a letter documenting what expenses were paid out of it and a notice that they are welcome to return if they were a good tenant. they can use the statement for their future landlord as well. if they were not a good tenant, they go on a do not rent list for future reference with a copy of mive.iut inspection signed by them indicating damages and/or non-compliance behavior.

If you're wanting to fix and then sell the property, the next thing you'll want to do is contact the listing agent and schedule some time to visit to determine the estimated repairs and how much they will cost.

Title company should be able to estimate maximum potential tax liability, pad it a bit, and escrow a reasonable amount to cover the amount eventually determined to be due.

If I understand it correctly, next time: use private money @Randy Thomason(silly me thought HM would be quicker and easier than making those private connections), budget for at 35% DP and work with someone that only relies on a BPO (that way, you know the person estimating market value knows the area--- I added that!)

I have seen OOS turnkey providers cash flow estimates ignore cap expense with the excuse that everything has just been rehabbed.