Author Topic: What would you pay?  (Read 200 times)

ryanht13

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What would you pay?
« on: December 05, 2017, 01:46:42 PM »
Package of 3 single family homes
gross rent combined $2,700 (b4 vacancies)
2 are tenant occupied
vacant home needs about 5k worth of work
little info on roofs, hvac units, etc.
C+ area with signs of revitalization in a growing city
Below average schools

What would you pay?

nurseart

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Re: What would you pay?
« Reply #1 on: Today at 08:16:09 AM »
I'm brand new to investing in properties but will take a stab at this.

First, would want more info about condition of the homes, the tenant history as well as vacancy rates in the area. I would also consider your portfolio.

I guess the 1% rule would say def not more than 270k. My interest would probably be piqued around 200 given some of the risks and unknowns.

YoungGranny

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Re: What would you pay?
« Reply #2 on: Today at 09:32:13 AM »
Doing a quick analysis on this without all the facts I'm seeing a 6.6% cash on cash return with a purchase price of $200k so I probably wouldn't go more than that and to be honest that return is borderline for me. I personally like to see a cash on cash return closer 10% or higher because for me, I like to beat the S&P historic return of 7% for it to be worth my time instead of dumping my money into vanguard.

I'm assumed a 30yr mortgage with 20% down, 7% vacancy, 10% prop mgmt, $6,000 property taxes for all 3 properties (average per house based on my area), also included CapX, insurance etc as well as the $5k immediated repair estimate.

I'd play around with the numbers yourself and see what you get and what you'd expect. There's been some great CF spreadsheets posted in this forum that I've found helpful.