resort condo buying for passive income. Need ideas please.
Hi Folks,
I am looking at resort condos. These are owner deeded properties. You own them, not time share. Here are the specific financials.
proposed sale price : $400K
Net operating income
after association dues, property mgmt fee, utilities, maintenance and repairs
insurance, real estate taxes: $28,500 (average value over last three years)
Their insurance that they charge is for replacement of building, replacement of personal property and liability coverage. Do I need to get more insurance?
planning down payment : $100K
loan amount : $300K
loan rate : 4.5 APR fixed for 30 years
Cap rate : 7.5%
Monthly cash flow : $865
Cash on Cash ROI : 10%
Does this seem OK? I am looking for passive income. What are some considerations and questions to ask.? Do I go with a real estate broker to deal? or just approach the resort seller agent and use it as negotiation for better price. This is a reputable resort which is fairly busy and we have stayed there before. We like them.
I am a newbie in this. Any help is deeply appreciated.
Peter