Deal analysis

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Rental hold (1 to 30+ units)

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Buy

Purchase price?Closing costs %?Initial repairs $?Down payment %?Rate %?Term yrs? Interest-only loan

Rent roll monthly rent per unit; add a row per unit type

x$3,500/mo

x$2,800/mo

4 units, $6,300/mo at full occupancy, $140,000 per unit

Other income $/mo?Vacancy %?

Operating expenses

Property tax $/yr?Insurance $/yr?Owner-paid utilities $/mo?Other fixed $/mo?HOA $/mo?Management % of rent?Repairs % of rent?CapEx reserve % of rent?

Hold and exit

Hold yrs?Rent growth %/yr?Expense growth %/yr?Appreciation %/yr?Exit cap rate %?Selling costs %?

Your targets

Cap rate at least %?Cash-on-cash at least %?GRM at most?DSCR at least?IRR at least %?

NOI$42,392

Cap rate7.6%

Cash flow / mo$738

Cash-on-cash5.0%

DSCR1.26

IRR (10 yr)13.0%

Against your targets

	This deal	Target
Cap rate	7.6%	6%+	Pass
Cash-on-cash	5.0%	8%+	Miss
Gross rent multiplier	7.24	under 10	Pass
DSCR	1.26	1.25+	Pass
IRR	13.0%	12%+	Pass
Value at 6% cap	$706,540
Max price for 8% cash-on-cash	$495,792

Year one

Gross potential rent	$75,600
Other income	$1,800
Vacancy (5%)	-$3,780
Effective gross income	$73,620
Property tax	$7,500
Insurance	$3,600
Owner-paid utilities	$4,200
Other fixed (yard, snow, pest, admin)	$3,000
Management	$5,746
Repairs and maintenance	$3,591
CapEx reserve	$3,591
Operating expenses (42% of EGI)	$31,228
Net operating income	$42,392
Debt service ($2,794/mo)	$33,531
Cash flow	$8,861
Total cash in	$176,800
Gross rent multiplier	7.24
1% rule (monthly rent / price)	1.13%
Break-even occupancy	81%

10-year projection

Year	NOI	Cash flow	Principal paid	Value	Equity
1	$42,392	$8,861	$4,266	$576,800	$161,066
2	$43,664	$10,133	$4,575	$594,104	$182,945
3	$44,974	$11,443	$4,906	$611,927	$205,674
4	$46,323	$12,792	$5,260	$630,285	$229,292
5	$47,713	$14,182	$5,640	$649,193	$253,841
6	$49,144	$15,613	$6,048	$668,669	$279,365
7	$50,619	$17,087	$6,485	$688,729	$305,910
8	$52,137	$18,606	$6,954	$709,391	$333,526
9	$53,701	$20,170	$7,457	$730,673	$362,265
10	$55,312	$21,781	$7,996	$752,593	$392,181
Sale	Sells for $752,593; $347,026 after costs and payoff. Total cash back $497,694 (2.82x), IRR 13.0%.

Here's how this deal looks

Here's how this rental looks. You buy 4 units for $560,000 with $176,800 in cash (down payment, closing, and initial repairs) and a $420,000 loan at 7%.

Rent is $75,600 a year at full occupancy. After 5% vacancy and $31,228 of operating costs, NOI is $42,392, a 7.6% cap rate on the price.

After the $2,794/month loan payment you keep $738 a month, 5.0% cash-on-cash. Break-even occupancy is 81%.

Held 10 years and appreciating 3% a year, the sale nets $347,026 after selling costs and the loan payoff. Total cash back $497,694 on $176,800 in: 2.82x, IRR 13.0%.

It misses your target on cash-on-cash. At your 6% target cap the property is worth $706,540, and $495,792 is the most you can pay to hit 8% cash-on-cash with this financing.

General education, not financial, tax, legal, or lending advice. Figures are illustrative and depend on your inputs. Verify taxes, insurance, and rents locally. Dan Dodd · DRE# 00000000 · East Bay, CA.

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