I am looking this as my 2nd deal. I appreciate any input.
House is 16,500
Rehab estimated at 2,500, but I think it will be closer to 4000.
Taxes are $750
Insurance is $500
Rent for about $525
Nice neighborhood so vacancy should not be a big issue except first 30 days of rehab and then getting renter.
Thanks!
Hooch Method of Valuation
Rent X 30 - Repairs = $15,750 - $4,000 = $11,750. This is what I pay in low income areas.
2% rule - Rent X 50 - Repairs = $26,250 - $4,000 = $22,250. This is for a middle class neighborhood.
Cash Flow analysis
Gross Income: $525/mth = $6,300 annual
Expenses (50% rule of thumb) -3,150
NOI: $3,150
20,500k@7%/20yrs: $1,907
Net LOSS!! $1,243
Or $103 per month.
The house will cash flow nicely. I never do a 20 year loan which is what I figured it on. I like 15 year loans. If it is in a middle class neighborhood you have a nice deal.
Stanfield,
This is an excellent deal. Here is how I see the numbers:
Gross rents: $525
Operating Expenses: $262
NOI: $263
Debt: ($20,500, 30 yr, 7%): $136
Cash flow: $127 per month, which is good.
Good Luck,
Mike
Interesting on the length of the note making all the difference!
I appreciate your deal. it is also interesting.