Okay guys, I know there’s like a million of these posts done a day… BUT… Here’s my numbers, I would like to see what everyone else thinks of it. The property is a duplex and a SFH on the same property. Stats:
2/1 x 3, 1222sq ft each
REO aging: 180 days
Total yearly taxes 1573.74
Monthly rent: 600/unit
I was thinking about this as a buy and Hold. I’ve got an appointment to inspect it later today to see what kind of work it needs. Let me know what you guys think…
To me (and most other “buy-an-hold geeks”), it ALL about cashflo! I couldn’t tell you whether it “deal or no deal, Howie” unless we know what the rental rates for like properties in the are are…
Sorry Keith, I had a blonde moment and forgot to post that. The original post is now updated to show that information.
Well, then, let’s see:
3 X $600 $1800
P/I (30 years @7.5%) $ 685
Insurance (???) 150
Vacancy @5% 90
Management (@7%) 126
TOTAL OUT $1333
Cashflow (monthly) $ 467
Cashflow (annnual) $5604
Based on these numbers (I guessed on APR, insurance, vacancy, etc.), if it didn’t need a LOT of work,
kdhastedt - You’re a number cruncher supreme! Thanks for the learning experience. I’m going to copy this for myself next time.
Is 180 days on market high for your area or just about right? I’m assuming you included that in your original post because that time frame is longer than most for your area. Hopefully the bank recognizes and appreciates the favor you’re doing them in taking that asset drain off their hands.
Use the KISS principal – don’t make it any harder than it needs to be! Largely, this is how I do my calculations…if it is minimal out-of-pocket, we look for at least $125 a month ($1500 a year PCF)…
If you are going to manage this yourself, then I think this could be a deal. However, I wouldn’t even look at this deal if I needed a property manager. I like a minimum of $200 per month per unit cashflow AND the gross income to be at least 2% of the purchase price (plus repairs); AND the positive cash flow to be at least 1/2 of the mortgage payment AND at least 30% equity at closing. Your actual expenses over time will be higher than you have listed because there will be evictions, legal fees, exterminations, damage caused by tenants, capital improvements, etc. These are all expenses that the gurus forget to mention.
You also need to consider the neighborhood and other local conditions.
Okay, well I’ve been out this afternoon looking at this house, meeting the realtor etc… and those details are forthcoming, but first to answer questions:
Yes 180days for an REO is considered a long time, especially for this type of property.
Well, the photos of the house will be getting put up in the next 12 hours on a photo page for everyone to take a look at if they wish. But now for the updates from this afternoon:
Newsflash 1) the 3 2 bedroom 1 bathroom units turned out to be something else entirely… :banghead: The house instead is just a duplex (despite all the records saying otherwise) that is a 2/1 on one side and a 3/2 on the other.
2) The comps in the neighborhood range from 125k to 136k and are renting out for between 1500 and 1900, with most of them pulling around 1650. Luckily the last owner had the house qualified for Section 8 and Katrina vouchers, which is big business in Houston.
3) This house is in an up and coming neighborhood. One of the big builders just started some new building in the neighborhood on previously unsold lots.
4) The house foreclosed for 80k and is currently listed for 98k. Appraised value (which is obviously all kinds of wrong) is 121 with the comps being a bit higher than that. So my estimated ARV is now 130k.
5) My MAO after inspecting the house today is going to be 68k. My first offer? 22k.
6) My estimated total loan amount needed to pull this off at 68k is going to be 80k.
7) According to the rental comps that were pulled, occupancy in this neighborhood is nearly perfect. It has a very high occupancy period it’s mostly multi-generational families.
Of course all of this is pending inspection. So pending the new appraisal I’m having done, and the new inspection I’ll probably get the house for about half the list price. :fingersx:
At any rate I’ve committed to writing three more offers on 3 other properties by Monday morning.
******Just wanted to also take a moment to thank all of you who responded for your advice and input on the matter. Now just cross your fingers and pray for me that I’m more stubborn than the bank *****