The Final Real Estate Property Analysis for Feb. 2011

Posted by Clifford 10 Feb, 2011

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Hello there! Yes, it’s been a while. Truth be told: we’ve been extensively testing version 2.0 of our new Real Estate Investing application for the iPhone.

In a nutshell: wow!

This is going to be the last post written for BuyThatDuplex. But the posts won’t stop! We’re moving our operation over to Facebook. If you’d like to continue following along, please click here and “Like” our new page called “NestVest”. The Facebook page has all kinds of goodies. We’re going to be uploading a new series of really short videos, including the continued “Property Analysis” series.

Also the new NestVest website showcases our newest Real Estate Investing application for the iPhone.

For this final analysis, I’ll be using NestVest Premium which should be released into the Apple App store around the beginning of March.

Within NestVest Premium I searched the MLS for potential properties in Houston, Texas. My range was anything below $150,000 with five or more bedrooms. Lo and behold, I found a five-unit apartment building for $140,000. The screen shots below show you the search results, the property I picked and finally the web page where the listing came from.

MLS Search Results

Specific Property Information

Original MLS Listing

My instincts tell me that a five-unit building with $140,000 price tag stands a good chance of having positive cashflow. Within NestVest, I save the property to my Favorites so I can analyze it properly.

We don’t know what the monthly rental income is. The MLS didn’t say. But NestVest queries Rentometer.com, which uses the zipcode, number of units and the number of bedrooms per unit to calculate what the potential rent might be. We know from the listing that this is a 5 unit building with five bedrooms so that’s essentially five one-bedroom apartments. Rentometer.com projects the rental income in this area is $750 per unit or $3,750 in total.

When we return to the main screen, the Preliminary Cashflow is $1,371 per month. Um . . . that’s pretty good.

Rentometer Projection

Preliminary Cashflow Analysis

Projected Expenses

The Expenses are all based on estimates. Within NestVest Premium I can search Zillow.com to find out what the current interest rates are and also the monthly insurance payment and monthly property taxes for that particular zip code. I push the button and Zillow.com returns the values I’m looking for. When I go back to the Property Info screen, I can see the new estimated monthly cashflow is $1,546/month.

The interest rate seems low to me. For a non-owner occupied building, I can only assume the lender will charge more for the interest rate. Also because this is a Five-unit building, some lenders get funny about their lending with more than four units. Beware of that. I’m going to change the interest rate to 8% just to be safe. Now I can see the new cashflow. is $1,318/month. Cap Rate is over 18% and the Cash on Cash ROI is eleventy gabillion percent. Huge.

Zillow Expense Estimates

Cashflow Analysis and Projections

Since the units haven’t disappeared from the MLS, I can only assume the adage “To good to be true” comes to mind. If the units truly were the “deal of the century” then someone would have snatched them up by now. Are there catastrophic problems with the building? Did it fail a building inspection and requires major overhaul? Divorce?

Good questions to ask and definitely worth checking on. The original MLS listing did not mention anything about the property being sold “as-is”. When a property is sold “as-is”, it usually means the property has a major problem and the owner doesn’t want to pay for it. They want to dump the property onto someone else for a reduced price.

As far as the ‘on paper’ aspect, the property appears solid.

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Happy Investing!