Having trouble running numbers on my personal home turned rental.

3 Replies

I am having trouble understanding how to run my numbers on my personal home turned rental. I purchased the home in early 2014 for $111,000, currently worth 155,000. I currently owe 86,000 on the property. I lived there up until a year ago when I moved in with my girlfriend. Yes I let it sit for a year paying the the mortgage (you know just in case) I finally decided to see if I could rent it out. I was able to get a tenant in paying 1500 a month (about avg. market rent). My mortgage/taxes/insurance is 1045 a month. Tenant pay all utilities. Now this is definitely a better situation than just paying the mortgage. I am hoping someone would be able to help me understand if this is a good financial move or should I have just sold the property. Thank you for any and all help. If you need more information just ask.

@Derek Markowicz Sounds like a good financial situation. I would suggest putting $150 in a savings account or something like that for CAPEX. Are there any other expenses like yard maintenance? If not it sounds like you have $300 a month in cash flow and that is pretty good. Any time you can buy a property and have someone else pay for it it is a good deal.

@Tyler Gibson , Lawn maintenance is also the tenants responsibility. Is it possible to calculate ROI or Cap rate? Having lived there and not really knowing how much I put into the property (probably 7-10k) I am having trouble understanding those numbers. Thanks.

@Derek Markowicz Have you tried using the property analyzers here on BP? I don't have a pro account so I don't use them. I have an Excel sheet I use that I actually found on BP. For me to calculate the ROI and cap rate I would need to know more about your mortgage. For example, I would need to know the interest rate on your mortgage and if you had any money down.

I ran some numbers with some assumptions. 

Purchase 111,000.00

Mortgage 104,000.00 6% interest 30year

2%vacancy

1800 annual cap ex

based on your mortgage/taxes/insurance and what the rent is I determined your annual cash flow would be about $3,232

that would be a 10% cap rate and your cashflow / initial investment would be 46%.

again it is hard to get some of these numbers accurately without all the information. 

based on the numbers you have given me I would say this is a pretty good deal.