[Inovestive]

[SAMPLE] Fictional preview material. This discussion was written by the site administrator to preview the Community design. Names, numbers and scenarios are hypothetical. It is not advice and not a real member post.

Hypothetical deal: a 3 bed / 2 bath, 1,450 sq ft single-family home on the east side of Tucson. I want a second pair of eyes on the math before anyone gets attached to it.

Assumptions

• Purchase price: $285,000, 25% down ($71,250), loan $213,750 at 6.75% for 30 years (about $1,386/month principal and interest)
• Market rent: $1,950/month
• Taxes $125/month, insurance $100/month
• Reserves: vacancy 5% ($98), maintenance 8% ($156), management 8% ($156)
• Closing costs and first repairs: about $10,000, so roughly $81,250 cash in

Result: net operating income is about $15,780 a year, a 5.5% cap rate on the price. Debt service is about $16,637 a year, so cash flow is roughly negative $860 a year (about -$70/month), or about -1% cash-on-cash.

On paper this does not work at this price and leverage. What would you change first: the offer price, the rent assumption, the loan structure, or walk away? And which numbers here would you want verified before trusting them (rent comps, insurance quote, property tax)?

[Inovestive]

[SAMPLE REPLY – fictional preview, written by the administrator] Good instinct to stress-test it. I would verify rent with three recent comparable leases and get a real insurance quote before touching the price. For reference, at $265,000 with the same 25% down the payment drops to about $1,289/month and cash flow turns slightly positive, roughly +$300 a year. That is still thin, so I would want either a lower price, a rent upside I can document, or a reason the property will appreciate faster than the area. Cash flow near zero leaves no room for a vacancy or a surprise roof.

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