Rental Property Analysis

5 Replies

Purchase Price = $150,000

Down Payment = $30,000

Mortgage = $120,000 ( payment with insurance/taxes = $808 )

Rent = $1100/month

End of year 1:
Total Income = $13,200

Mortgage/Tax/insurance = $9,696

Profit = $3,504

Reduction in principle = $2,101

Total profit = $5605

ROI = $5605/$30000 = 19%

Thoughts ?

Of course, i would love to buy houses for 50k and flip for 150k.. but that's not going to happen in metro atlanta.

@Alan Hicks  Do not forget about:

- Cap Ex

- Maintenance

- Vacancy

- Other (Property Manager, Utilities, etc.)

@Alan Hicks Here's what does happen in the Atlanta metro area:  break/fix maintenance, vacancy, cap-ex, owner-paid utilities, evictions, etc.  I'm being a little glib but it's just to underscore (as @Steve DellaPelle points out) that your "Profit" isn't your profit.  There's a good chance that this property will be cash-flow negative over the course of ~5 years with the numbers that you've provided.  

I just sold one of my properties.

Purchase = 90,500

Sold ( 3 years later ) = 133k

But I also have a rental from 2005

Mortgage = 808

Rent = 700

Been doing that for 12 years... yes.. I pay 108 per month.

ROI is 11%. It's not bad if the renter always pays, nothing breaks, insurance or taxes never go up. I think you over paid. This is a great time to sell it and buy a better deal.

11.7% cash on cash isn't bad assuming it's self managed and occupied with no issues. This is more an appreciate/debt reduction play. If the area is appreciating, you may make a good return on the sale. 

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