Newbie Needs Help In Calculating Numbers.
Hi,
I am looking to purchase a 3 unit house for my first rental property. Here are the numbers.
price: 250000
built: 1905
units: 3
2092 sq. ft.
Income
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GSI: 30000
vacancy: 2500 (1 month)
GOI: 27500
Expenses
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Annual Taxes: 4672
Maintainence @ 10% of income: 3000
Management company @15%: 4500
Utils & trash: 0
Insurance: How do i find out? what's a good estimate?
Assuming 2000
NOI = 13328
If I take out a mortage $200,000 at 5.5% for 30 years. The monthly mortage payments are 1135.58. yearly = 13626.96.
I think the deal is bad. Am I doing the analysis correctly? Am I missing any major costs? Are my numbers realistic? Any feedback would be great.
Thanks.
Use the Pro-formanator tool under my tools on your front page. It is a great tool
Joe
Cant get to it. I don't have a subscription yet.
it look as though this property is break even at best.
try to get an interest only loan on the property.......
can you increase the rents without losing tenants....
is this property in an area where prices are increasing rapidly,.....
can you convert it to condo's
Well I didn't run your numbers, but at a quick glance you are paying $50K for the priviledge of lossing $300 a year and that is if you didn't miss anything, you didn't have a high vacancy this year, you didn't have any maintenance issues, etc.
Maybe you can correct this buy bumping rents 5% that puts you in the positive, but still pretty thin, but it gets you to a positive ROI.
I see that you put $0 for utilities so I am assuming there is no common area or exterior lighting you would be responsible for.
If you have more cash reserves to cover emergencies and truly think you can hike rents, you may want to consider doing it and sharpening your pencil a bit on the numbers, like getting an insurance quote, etc.
If you have $50k to invest I think you could do MUCH better off. In my opinion the only thing that makes this a potential good deal is A) if it's worth considerably more than what you are paying, B) it's in a rapidly appreciating area or C) the rents are WAY below market and there are no rent control laws preventing you from raising them when you assume ownership.
I hope this helps.
Thanks for everybody's input. I just got a subscription and the Pro-formanator is good, im still playing with it.
I think the area will be rapidly appreciating in the future. I don't think I can raise the rent.
What's so good about a interest only loan?
What type of insurance is needed if I am a landlord? Will a basic home owner policy do?
What's the proper % / rule of thumb % of income should I put aside for maintance of an old building?
Thanks for everybody's input. I'll look at the numbers some more.