Analyzing a recent project: purchase price $120,000, rehab budget $30,000, holding costs $8,000. ARV is $180,000. Projected net profit is $22,000. This 18.3% return on investment looks promising, but careful consideration of local market trends and thorouugh property analysis are crucial for success.
I'd like to take a closer look at the vacancy assumptions and CAM reconciliation for this property. What's the expected vacancy rate and how does it factor into the projected net profit? Additionally, what's the creditworthiness of the tenants, and are there any plans for tenant retention or replacement?
I'd like to take a closer look at the pro-froma on this deal. The 18.3% return on investment seems aggressive, considering the local market trends. What are the projected rent bumps and expense ratios factored into this calculation? Additionally, how does the loan size relate to the cap rate, and are there any potential risks or mitigation strategies in place? Assuming a 25% down payment, the loan amount would be $90,000. With a 5% cap rate, the annual net operating icome would need to be around $9,000 to support the loan. I'm curious to know how the sponsor arrived at the projected net profit of $22,000 and what contingency plans are in place to address potential shortfalls.