Would you do this deal...
OK. I'm brand new to this. I found this property. It is a few miles from a very good area.
This property is in great shape. It sold for 120K about 5 years ago. I think I can get it for around 53K. I have the cash to buy it outright but some have recomended to get a mortgage anyway. Does the price fall in line with what you would expect for a forclosure?
Would you do the deal?
Here is how the numbers look:
POTENTIAL RENTAL INCOME $14,400 Total Potential Income if rented 100%
Less: Vacancy $(450) Assumed 2% Vacancy Factor
EFFECTIVE RENTAL INCOME $13,950
GROSS OPERATING INCOME $13,950 Total Revenue
OPERATING EXPENSES
Real Estate Taxes $2,500 Property Taxes
Property Insurance $700
Repairs and Maintenance $500
Utilities $150
Lawn and Grounds Keeping $300
Miscellaneous $300
TOTAL OPERATING EXPENSES $4,550 Sum of Line 6 thru 23
NET OPERATING INCOME $9,400
Less: Annual Debt Service $(2,864) Total Mortgage Payments
CASH FLOW BEFORE TAXES $6,536
Add Back: Principal Payments $864 Principal Paid on Loan
- Depreciation $(3,818) Tax Depreciation on Building
TAXABLE NET INCOME (LOSS) $3,582