Author Topic: Help me evaluate this please  (Read 439 times)

1later_bloomer

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Help me evaluate this please
« on: August 06, 2017, 09:02:53 PM »
Hi All, I've been a lurker for a while and enjoy what I read. Big stuff out of the way, I've been a money moron and I'm working on just having a half decent regular retirement, forget RE. Anyway I am considering a property just down the street from me. It is listed for $160,000 but it has been sitting on the market for a few weeks. That's not really unusual around here, I'm in Canada and the noise about raising the interest rates seems to have freaked everyone out. Anyway I'm going to view it tomorrow. If there are no big problems with the inspection and it just needs a superficial freshening up I would try to get it for $140,000. By superficial I mean painting and flooring. That would leave me with a mortgage of about $115,000 for a 3 bedroom, 1 1/2 bath. The average rent for comparables is $1400 plus utilities.

Mortgage $475
Taxes  $150 (estimate)
Vacancy contingency $140
Repairs  $140
Insurance  $150 (estimate)
Total $1055
So I would have a cash flow of $345/month

Am I figuring this right?

1later_bloomer

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Re: Help me evaluate this please
« Reply #1 on: August 07, 2017, 09:12:11 PM »
I went to view it today. It was so disappointing. They made really crazy decisions with this place. All the flooring would have to be replaced, 1800 sq ft. A little corner wall for the kitchen would need to come down and some kind of island be put in. The downstairs rooms would have to be reconfigured, mainly just placing the walls in different places, no moving load bearing walls or anything. A lot of wall paper to remove and painting to be done and a shower installed in the downstairs bathroom. Eventually all 8 windows would have to be replaced. Part of me still wants to do it but it might just be an emotional reaction.

kellyincville

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Re: Help me evaluate this please
« Reply #2 on: August 08, 2017, 09:29:03 AM »
Your numbers in your initial post look good except that you left out CapEx (roof, HVAC, water heater, etc), which is another 10% of rent. 

Take the emotion of the equation, calculate how much it would cost to do the repairs necessary to prepare the property for rent (not perfection), subtract that amount plus 20% out of your offer and submit. 

1later_bloomer

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Re: Help me evaluate this please
« Reply #3 on: August 08, 2017, 03:51:05 PM »
Thanks Kelly