Deal Analysis: 4848 Matterhorn Dr
I got a call from my real estate agent the other night.
It was about 8pm.
He had just come across a property that he wanted to run by me.
We needed to submit an offer that night if I was interested, so I got on my computer, ran the numbers, and gave him a callback.
“I appreciate you sending me the deal, but I am going to have to pass on this one,” I told him.
He wasn’t bothered by this — I’ve turned down countless properties he’s sent me, but I have bought multiple through him in the past, so he knows I will actually buy when the deal is right.
Want feedback?
Do you have a deal you’re considering? Do you want me to take a look at it for you and provide feedback? Did you complete an analysis of a property yourself and want some feedback on the analysis itself? You can submit your deals and analyses for me to review by emailing the details to robert@therobertleonard.com
Here’s why I passed on this property:
The cash on cash return of just under 11% was too low for me right now.
With current market conditions, I believe there is increased risk in the market, and I am not willing to enter the market for a 10.8% cash on cash return, with a nearly $35,000 cash investment.
Here’s what I did like about the property:
The monthly cash flow on a per-door basis was pretty good. I’m happy with $300 per door per month.
The property itself is great — it’s practically turnkey and I know the bed/bath count is desirable in that area. It’s also in one of the best parts of the town.
This property isn’t from a “turnkey provider” so it isn’t technically a “turnkey property”, but the property could be considered “turnkey” in the sense that it is pretty much rent ready. Someone could buy this property and rent it out as is.
For many investors, this would be a good deal. It has solid returns and would require very little work. However, I’ve purchased deals recently and I have my eyes on some other projects, so this just wasn’t right for me at this time.
The other key take is that a property can satisfy your benchmarks in one area, but not the other, and without both, you don’t have a deal. In this case, it satisfied my cash flow per door benchmark, but it didn’t satisfy my cash on cash benchmark.
Do you have any questions about the analysis I did on this property? Would you have bought it?
All the best,
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