Property Acquisition Research, Flip & Rental Evaluator

SAMPLE OUTPUT — Fictional example for demonstration only PROMPT 1 — PROPERTY RESEARCH BRIEF Inputs used: - Investor: Jordan - Market: Cleveland, OH - Property: 123 Maple Ridge Ave, Cleveland, OH 44105 - Buy box: single-family homes under $160K in working-class/B-minus neighborhoods 1. Property profile 123 Maple Ridge Ave appears to be a detached single-family home. Public listing-style records show an estimated value range of approximately $118,000 to $132,000, with the most recent visible sale recorded in 2018 at approximately $72,000. The home is reported as roughly 1,320 sq. ft., 3 bedrooms, 1.5 baths, on a 4,800 sq. ft. lot, built around 1947. Public photos/notes suggest an older interior with dated kitchen finishes, worn flooring, and possible deferred exterior maintenance. No interior systems should be assumed functional without inspection. 2. Neighborhood analysis The surrounding neighborhood is affordable and investor-active, with mixed owner-occupant and rental housing. Nearby schools appear below average to average depending on grade level, so school quality is unlikely to be the main demand driver. Walkability is moderate for errands but car access remains important. Employment access is supported by proximity to major arterial roads and regional healthcare, industrial, and service-sector jobs within a reasonable commute. Area signals are mixed: affordability supports rental demand, but visible property condition variation and block-by-block quality should be checked carefully. 3. Market conditions Comparable entry-level single-family homes in this price band appear to be moving at a warm pace, with median days on market around 25–40 days depending on condition and pricing. Buyer demand signal: WARM. Renovated, clean, FHA-friendly homes are still attracting demand, but overpriced or visibly deferred homes are taking longer. 4. Red flags Items to verify before offer: title/ownership history, open permits, tax delinquencies, municipal point-of-sale requirements, zoning conformity, flood zone status, insurance availability, foundation/basement moisture, roof age, HVAC age, electrical panel condition, and whether there are any local rental registration requirements. No HOA should be assumed unless confirmed in deed/MLS records. 5. Summary This is a modest, older single-family property in an affordability-driven market where both flip and rental exits may be possible, but the deal likely depends on purchase price and renovation depth. The market supports clean, functional housing, yet the neighborhood requires block-level diligence and conservative assumptions. The property is not obviously disqualified, but it should be underwritten as a condition-sensitive deal with inspection-confirmed repair numbers. Questions before Prompt 2: - What is your offer price? - What ARV did you derive from your comps? - Do you have inspection notes or photos for roof, HVAC, basement, and electrical? --- PROMPT 2 — FLIP EVALUATION Inputs used: - ARV supplied by investor: $185,000 - Offer price: $105,000 - Target hold period: 5 months - Financing: hard money at 12% interest, 2 points - Rehab experience: mid-grade full renovation 1. Rehab budget range Estimated rehab range: $42,000–$58,000 - Roof: $0–$9,000, inspection required; assume repair unless age/leaks require replacement - HVAC: $4,000–$8,500, inspection required - Kitchen: $10,000–$15,000 - Baths: $7,000–$11,000 - Flooring: $5,000–$7,500 - Interior paint/drywall: $4,500–$7,000 - Exterior/landscaping: $3,000–$5,000 - Contingency: $8,000–$10,000 2. Holding cost estimate Estimated 5-month hold: - Taxes: $1,250 - Insurance: $900 - Utilities/lawn/security: $1,250 - Financing interest: about $5,250 on a $105,000 purchase assumption at 12% - Hard money points: $2,100 Estimated holding/financing cost: $10,750 3. Profit analysis - ARV: $185,000 - Purchase price: ($105,000) - Rehab midpoint: ($50,000) - Holding/financing: ($10,750) - Buy closing costs estimate: ($3,150) - Sale closing costs + commission estimate, 8% of ARV: ($14,800) Estimated net profit: $1,300 Estimated ROI on cash/cost basis: approximately 0.8% 4. Maximum allowable offer for 20% net margin Target net margin = 20% of ARV = $37,000 profit. MAO = $185,000 - $50,000 rehab - $10,750 holding/financing - $14,800 sale costs - $3,150 buy costs - $37,000 target profit = approximately $69,300. 5. Flip verdict At a $105,000 offer price, this flip does not work under the supplied ARV and conservative cost assumptions. The variables most likely to kill the deal are rehab scope expanding beyond $50K, ARV softness below $185K, and longer hold time/financing drag. This only becomes attractive if the purchase price drops materially, the rehab is confirmed much lighter, or the ARV is supported at a meaningfully higher number. Questions before Prompt 3: - What rent estimate did you derive from rental comps? - What financing terms should I use for the rental analysis? - Will you self-manage or use a property manager? --- PROMPT 3 — RENTAL EVALUATION Inputs used: - Purchase price: $105,000 - Rent estimate supplied by investor: $1,450/month - Financing: 25% down, 7.25%, 30-year conventional - Management: 10% property management - Minimum acceptable cash-on-cash return: 6% - Rehab/initial repairs assumed: $20,000 rental-ready budget 1. Operating expense breakdown - Gross rent: $1,450/month - Vacancy at 8%: ($116) - Property taxes: ($250) - Insurance: ($125) - Maintenance reserve at 8%: ($116) - Property management at 10%: ($145) - HOA: $0 assumed, must verify Estimated monthly NOI: $698 2. Cash flow analysis Loan amount at 75% LTV: $78,750. Estimated principal and interest at 7.25% over 30 years: approximately $537/month. Monthly cash flow: $698 NOI - $537 debt service = $161/month. Annual cash flow: approximately $1,932. 3. Return metrics - Cap rate: annual NOI $8,376 / $105,000 purchase price = 8.0% - Estimated cash invested: $26,250 down payment + $3,150 closing + $20,000 initial repairs = $49,400 - Cash-on-cash return: $1,932 / $49,400 = 3.9% - GRM: $105,000 / $17,400 annual gross rent = 6.0 This does not meet the 6% minimum cash-on-cash threshold as underwritten. 4. Sensitivity table Scenario | Monthly Cash Flow | Annual Cash Flow | Cash-on-Cash Base case | $161 | $1,932 | 3.9% Rent 10% lower | about $31 | $372 | 0.8% Vacancy 12% | about $103 | $1,236 | 2.5% Rent 10% lower + 12% vacancy | about negative $27 | negative $324 | negative 0.7% 5. Rental verdict The property may be viable as an affordable rental if the condition is manageable, but it does not hit a 6% cash-on-cash return at a $105,000 purchase price with $20,000 in initial repairs and third-party management. To reach the target return, the purchase price likely needs to be closer to the low-to-mid $80Ks unless rent is higher, rehab is lower, or financing improves. The best next step is to confirm rent, tax reassessment risk, insurance, and the true rental-ready repair budget before choosing the rental path.