My Cash Flow: House #1

I’m going to break down the numbers for you on House #1:

Purchase Price: $100,000

Down-Payment Needed: $0 (Home Equity Loans do not require a down-payment)

Closing Costs: ~$1,000 (This is to pay for the process of the loan which requires underwriting, an appraisal, an attorney, etc.)

I took out a Home Equity Loan on the property to pay off the existing mortgage and to buy out my brother and his wife.

Renovations: $20,000

Once I gained control of the property and gutted the entire thing, I spent about $20,000 on renovations.

Total Up-front Costs To Purchase: ~$21,000

Luckily, a Home Equity Loan (very much like a mortgage) can be paid out over an extended amount of time, on a month-to-month basis.

Monthly Breakdown:

$100,000 @5.75% over 20-years = ~$700/month

Homeowners Insurance @ $1,300 = ~$110/month

Property Taxes @ $2,200 = ~$185/month

Property Management @ 8% of Gross Rents = ~$125

Maintenance @ 6% of Gross Rents = ~$95

Capital Expenditures @ 6% of Gross Rents = ~$95

Vacancy @ 6% of Gross Rents = ~$95

Total Monthly Expenses = ~$1,405

Total Monthly Income (From Rents) = $1,575

Monthly Profits = $170/month

Annual Profits = $2,040/year

I will explain all of these in detail in a future post but, in short, these are all of the expenses that I deem necessary when analyzing and purchasing a property for investment. You need to protect yourself and always prepare for the worst.

I will always post the above when I purchase a new property!

Cheers!

 

 

 

 

 

 

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