Analyze My deal

you guys seem to b e able to tell it like it is so can someone please check my numbers

3 attached row homes in a row, (One person owns 2 of them - inhierited from family; A second person - an older couple - owns the third house) both are 3 bed/1 bath and they are in a decent city neighbor hood (a neighborhood that I live in so it’s not the ghetto and will be more conveneint to manage they are very close to my house…)

I’m looking at this a 2 transactions as they are 2 different sellers and the 2 together are in worse shape (and owned by out of town hiers) that the single unit owned by the older couple which is in nicer - rentable shape…

here is my plan

2 together -
15k each (total of 30K for both)
AVR 45-55k each
12k per unit needed for repairs/improvements…

so 27k per unit cost…

3rd unit, $38k cost - minor repairs needed (i’m adding 2k) so $40k cost


3 units - $67k total cost / AVR $50k x 3 = $150k

rents - $750 per, ($2250/mo)

and these should rent pretty easily due to the urban locale …other units i have in this area rent with almost no effort (last 3 tenants in other units came via word of mouth - no down time)
The sellers of the 2 units will take a 3 year note back with a baloon [ayment at the end - I will refi the place to pay them back once i have the “Seasoning” my local banks have all been requiring recently …

so 50% rule
2250 rents
1125 expenses
leaves me 1125 for P&I and my cash flow…


PS - I will be managing the properties myself

On the surface(if the numbers are correct), it seems like a good deal. Why pay more for the third one thogh if you can get two of 27K each. Why spend 40K on the 3rd? Also, Your total number is 94K from what I show, not 67K. 54K for rents of $1500 is a sound deal. 94K for $2250 is still decent but not as good as the first option.

Here’s how I see this deal:

Gross Rents: $2,250
Operating Expenses: $1,125
NOI: $1,125

Mortgage ($94K, 30 yr, 7%): $625

Cash flow: $500 or $166 per unit per month



Thansk for the replies…

I’m not sure how i did that math, but yeah 94 is what I meant :biggrin

But even at 94 this still seems good …

I feel pretty good about getting the 2 porperties for 15k each - I have already had a deal fall through with these people a couple of months ago ( i had put together a deal where I inflated the sales price so I could get money back at the closing adn the sellers were going to walk fromt he table with $32k for both and I was getting my 24 k - but the 24k flowed through them, so they were concerned about paying tax on the inflated income they were going to be taxed on but not actually receive - again - this seller is a brother/sister combo, out of town who inherited the properties) … I digress… My point is - -they were ok with walking away with 32k on the deal, the had a problem with the structure of the deal … So now that it has been a few months with NO action over there… I am going back with a slighty worse deal…

Brockovich - you make a good point about why paying so much more for the property nextdoor…I’m not sure why … they were asking $50k, (the other 2 were listed for 50k combined, for reference.) and this place is in much better shape , there are some style choices i disagree with but it could be inhibitated immediately while I get the other 2 up to speed.

maybe I should go lower with the single unit … Im nervous that the old couple will not be as willing to gove me my price when they know I am buying the 2 next door …

sounds like a good deal all around.

I would think you’d be in a better position with the old couple after buying the 2 next door at a much lower price. I would focus on the 2 rehab units, they seem to be the best part of the deal. after you have them then negotiate with the couple and be firm, hell i would let them know what the other 2 cost me combined. they may start to realize their property isn’t as valuable as they thought.


that makes sense… thanks for the feedback …

Do you think I could use the 2 rehabs as “Comps” for the negotiaion with the older couple … Is that what you are suggesting? ? ?

Tell them - Hey, I paid 15k for each of those, and another 12 to rehab (round it up to 15 since i always run over on costs :slight_smile: so since their place is already in sound condition, the most I can do for them is 30k — and then negotiate up from there as needed - knowing i wont go any higher than 40k…

If I get it lower than 40k then GREAT - but I think I can still do ok over there at 40…but less is always better :slight_smile:

I havent actually talked to the older folks - and I’m concerned because the same agent reps all 3 properties… but that agent said these people would work with me, but wanted to wait until the rehab deal was solid before the negotiated - - but then again - agents lie so she may not have even talked to them,…

This is exactly what I was thinking. Unless there is a line waiting out the door to buy these, you might close on the less expensive two first. This will kill any comps the other seller’s are expecting and make it harder for them to sell. At $40k, sounds like it’s almost a full retail deal anyway.

I hope you’re not using the seller’s agent to represent you if you use this strategy. It’s not something I would disclose, though it will become very obvious to her when you make an offer on only two of the properties.

no way would I use the sellers agent … for the reason you mentioned above and plus she;s a dope :rolleyes

I am using my best freind/partner on a few investmest - who is a realtor/investor…

he’s got my back … and he is great at these things… he talks to the agent like he doesnt know me very well, and does the " Agent to agent, tell me what these people will accept, and I’ll work with my buyer to get this done" routine … :biggrin[color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][color=black][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color][/color]