Help me analyze this

Rehabbing, Fix and Flip, Rental Properties
1

Hi all,

I have been analyzing some properties that I am looking to buy as rentals. I think that I have a pretty good idea about my offer price but would like to get the opinion of some more seasoned investors. Thanks for the help. Here are the numbers:

5 properties, 7 units

Asking price - 295K
Annual rents - 38,760
Vacancy - 7%
Management - 10%
Expenses - 10%
Taxes - 6500 (annual)
Insurance - 2400 (annual)
30 yr. loan @ 7.125
15K down (using HELOC @ 7.5%)
Offer price - 230K

Do these numbers look feasible to any of you. Please give me your thoughts and poke holes in this. I would rather find out my mistakes from all of you than make a bad purchase. Thank you.

2

Here is the way I see the property using the real world expense numbers:

Gross Rents: $3,230 per month
Operating Expenses: $1,615 per month
NOI: $1,615 per month

Mortgage payments: $1,560

Positive Cash Flow: $55 or $7.85 per unit per month - OUCH!

This cash flow is VERY low and this is not a good deal at this price.

Mike

3

Thanks for the input Mike. It, as always, is appreciated.

Cheers

4

Spoken like a true professional Mike. I agree the reward will not compensate the aggravation in this deal.