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Steve-0
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 Posted: Tue Feb 07, 2012 3:39 pm GMT Post subject: Re: sound good |
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| dantm wrote: | | dude1040EZ wrote: | let's talk numbers.
for $650000, you put down 20%, which is $130000. You get jumbo loan for $520000 for 30 years fix at about 5%, the monthly mortgage would be $2800. tax would be around 5000 to 6000 thousands, make it 5500 in average, about 460 per month . insurance would be about 1200 per year, so 100 per month. Maintance would be about $250 per month, since it is a trible decker.
Total expense: 2800 + 460 + 100 + 250 = 3610
Total income : 2000 x3 =6000 (
surplus: 6000 - 3610 = 2390 (looking good from accounting perspective!)
If you have the down payment, If an postive cashflow of 2390 can offset your headache of serving 3 rental units, then I think you should go for it. |
Thanks for the feedback -- this is what I was saying to some great extent (although the numbers are not as good in reality), but here's a calculation:
$650K buy price, must have 25% down for investment property, so $162.50K down, but mortgage value goes down, so 487.50K mortgage at 5% is $2,625/month.
Taxes are around 1%, so $6,000/year, or $500/month.
Insurance is $1,200/year so $100/month.
Maintenance is $3,000/year so $250/month.
Some utilities (common areas) add up to ~$250/month as well.
Revenue on this 3-fam is $5,700/month (about $1,900/unit).
There should be a ~5% vacancy rate and a 2% bad debt allowance on average (per year).
So:
Income: $5,700 x 12 month - 7% = $63,612/year
Expenses: $2,625 (mortgage) + $500 (taxes) + $100 (insurance) + $250 (maintenance) + $250 (utilities) = $3,725 x 12 month = $44,700/year
Difference = 63,612 - 44,700 ~ 18,912/year = $1,600/month
As a return on the original investment is $18,912/$162,500 (Downpayment) = 11.64% which is a little too good to be true...
Thoughts? |
Add another $250 for water and sewer- It went up 7% last year. SO did taxes. If you want to make money in this biz, you yourself should know how to self perform the vast majority of maint issues. |
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