Buy and Hold #25 Under Handshake Contract

[Ben Parr]

I met with my mortgage broker earlier this week to do a refi on my primary, and lo and behold, he had a house to sell me. It was not quite my ideal house, only 2 bedrooms, no garage, no basement, but he offered me land contract terms and only 15% down so it was hard to pass up. Definitely not a home run, but a solid double. Before someone asks here are the numbers. $55,000 with $8,250 down, $46,750 note at 5.5% amortized for 30 with a baloon in 10. I wouldn't have paid more than $45k for the house with cash, but the terms were worth another $10k to me.

Gross Scheduled Rent $9600

Vacancy 10%                  960

Net Rent                          8640

Insurance                          375

Management                    900  (though I do self manage for now)

Taxes                               1200

Repairs, Capex, & misc. 1500

NOI $4665

Principle and Int.             $3180

Annual Cash Flow          $1485 (Or $2385 with management figured back)

Cash on cash                  18% (Or 29% with management figured back)

It's in Madison Heights, within a half mile of 7 of my other rentals. The only part I wasn't thrilled with was the balloon, but I guess I have nine years before I have to worry about that.

[Rob Beland]

I cant get past the $100 or so per month cash flow. Is that typical for that area? I spend more than that on booze in a month. You put $8K down so its going to take you 7 years to get your money back.