I just got off the phone with my Realtor on this home, and it was put under contract because I initially thought I could not make it work out. I was talking it over with my dad @Alex Daus prior to that where we trying to find the error in my numbers.
Not wanting all the work we put into the numbers to go to waste, I would like to post my analysis anyways and get some feedback on what you guys think.
Some Background: I have pre-qualification for a USDA 0 down loan and planed to use that to purchase. The townhouse itself is a 3 bedroom 2.5 bath that was in decent shape. The plan was to live in it for a year with a roommate to keep costs down, then transition to a full blown rental in a year (per the conditions on USDA loans). We were having some trouble getting the Loan payment to sync with the lender's, was wondering if you could find the difference as well.
|Cap ex (5%)||$60.00||$60.00|
|Net Operating income||$63.81||$53.32|
|Cash on cash||8.51%||7.11%|
That looked a lot cleaner in preview, here you go:
Your calculated mortgage payment of $525 looks like you used an interest rate around 3.75% over 30 years amortization.
Did your lender amortize over 15 years because that would calculate out to about $850/month.
Another explanation is if the lender included estimated taxes + insurance + HOA + PMI.
Note: I feel as though your estimated costs for insurance are too high. I pay about $170 per year for my rental townhome with shared walls.
Thanks for your reply @Marc Jolicoeur.
The interest rate is 3.5%, and the lender is including everything in that grouping in the monthly payment. I usually end up about $20 short of what they total which is why I was curious if there was something I was missing regarding USDA Loans.
Also yeah I ended up way overestimating the insurance cost too. I spoke with another investor who owns a townhome and he agreed with you that $170 a year is closer to the mark.
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