Beach Rental Property Analysis

[Lindsey Kocher]

First time poster and new to the world of REI! We are looking at purchasing our first investment property in our favorite vacation spot.

4/3 1500 Sq foot beach house for $675k.   This is somewhat competitive in this market.  Turn-key and fully furnished. 

Financing plan is hard money loan for 25% (possibly using some of our own capital), and DSCR loan for the mortgage. Average projected monthly rental income is around 8-11k (seasonal fluctuation).

Using the rental calculator tool (with estimated taxes/insurance/PM fees) I'm still only generating $1000/month, which isn't enough to cover the hard money loan.  The BIG thing I can't begin to estimate and help me best understand if this is a good buy is whether or not the tax benefits are going to keep me in the black?  

I suspect that may be a 5-10 yr property for us so we could claim some depreciation.  Monthly operating costs are estimated to be around $6700 (>50%!), but all of this should be tax deductible right?

I've been crunching these number so long and we REALLY want this place....someone help guide me in the right direction!  

[Robin Simon]

Quote from @Lindsey Kocher:

Quote from @Robin Simon:

Quote from @Lindsey Kocher:

First time poster and new to the world of REI! We are looking at purchasing our first investment property in our favorite vacation spot.

4/3 1500 Sq foot beach house for $675k.   This is somewhat competitive in this market.  Turn-key and fully furnished. 

Financing plan is hard money loan for 25% (possibly using some of our own capital), and DSCR loan for the mortgage. Average projected monthly rental income is around 8-11k (seasonal fluctuation).

Using the rental calculator tool (with estimated taxes/insurance/PM fees) I'm still only generating $1000/month, which isn't enough to cover the hard money loan.  The BIG thing I can't begin to estimate and help me best understand if this is a good buy is whether or not the tax benefits are going to keep me in the black?  

I suspect that may be a 5-10 yr property for us so we could claim some depreciation.  Monthly operating costs are estimated to be around $6700 (>50%!), but all of this should be tax deductible right?

I've been crunching these number so long and we REALLY want this place....someone help guide me in the right direction!  

Pretty much all DSCR Lenders will not let you have a hard money loan that secures the property for the 25% down payment just FYI (if I am reading you correctly)

Can you tell me if DSCR lenders would allow for IRA to be used as DP?  I've decided against the beach house but was already looking at a LTR closer to home with a 14% ROI.  

 Should be fine since the down payment would be paid at close to purchase the property, it doesn't really affect the DSCR Lender's underwriting (primarily concerned about the property and a few months of post-close liquid asset reserves)