Vendor · Kirkland, WA · Member since 2015 · 15 posts · 1 vote
I have a condo that will cash flow $1100 per month. However to rent a one bedroom apartment would cost me $1500 per month or more. My mortgage with HOA fees is $1050 per month. So part of my cash flow would cover the additional money spent on rent. I will end up with over $600 per month cash flow but I would still be spending $1500 per month on rent does this make sense? There's a rental cap here and I want to make sure I secure a spot before it is full. The hot Seattle market will make it difficult for me to find anything in my price range to buy down the road. Unless I can find something I can split into two units and rent one of those out. What would you do??
Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
9y
Not sure I fully understand your numbers. Does your cash flow calculation include all expenses for the property beyond mortgage and HOA? How about property management cost? And what about qualitative considerations of renting another place like location, parking, any preference or personalized decor you did to your condo, etc?
At first glance to me, it seems odd to rent out your condo and you move out and become a tenant someplace else. But on the other hand, if you want to get into real estate investing, this would be a great learning and transitional experience for you.
Vendor · Kirkland, WA · Member since 2015 · 15 posts · 1 vote
9y
My mortgage, taxes and HOA on the condo is $1045. I was told today I should ask $2200 per month. I'm applying for a 1x1 apt for $1465. I haven't taken out vacancy, cap ex etc but with $1155 after my mortgage once I took those out I'd still be doing pretty well. I will be managing the condo. I worked in apt leasing for 3 years.
I'm Ubering on the side so I can cover the mortgage if I'm w/o a renter for a while. Plus $95K HELOC available to me as well.
Investor · Moreno Valley, CA · Member since 2014 · 3 posts · 4 votes
9y
Rentometer the rental rates to be sure. I would also check craigslist for rental rates. I have never had a condo as a rental but my first SFR was a similar situation to yours. I bought it, rented it and moved to a 1 bed 1 bath apartment. I was thinking at the time if all fails atleast I could always just move back in and start over. I self managed and was able to get it stable. I think you well do fine just be conservative with your numbers. Be confident and have fun,,,best of luck to you.
Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
9y
There are a few issues with your idea i see.
1. You are not accounting for vacancy, repairs, capX in your cash flow. Tenants are not going to treat your place as well as you would. You get depreciation on your taxes but unless you 1031 later you will pay that back
2. I would be more in favor of it if you were finding a less expensive place or if it drastically cut your commute time.
With that said there are people with rent controlled places in SF who have a small rental empire earning them a great passive income
Vendor · Kirkland, WA · Member since 2015 · 15 posts · 1 vote
9y
Since this cash flows great even when other expenses are factored in, my community has a rental cap and there's a couple spots open now when there usually are not. I wanted to secure a spot not so that I can continue to rent it.
I've checked some comps in the area and my price of $2200 is good. I'm a fan of the 1031 exchange too! My mom did 2 1031 exchanges on 2 properties she bought in 1971 and made a ton of money and saved over $350K in taxes and now when I inherit it it's stepped up in basis to today's appraised value!