Condo Rental Analysis

4 Replies

Hello,

I'm deciding whether to make a move on a 2 bed, 2 bath condo located in Fullerton, CA. It's listed for $390,000 with HOA fees of $320/month and property tax is about $4000/year. I have the ability to make a 5-7% down payment..

It has 1 master with attached bath and a 2nd bedroom. It also has a dining room with a door that can be turned into a third bedroom. I plan to live in the dining room area and rent the master for $1200 and the bedroom for $1100 for a total of $2300 in rental income.

Trying to figure out what I should offer for the property in order for there to be positive cash flow. Please help!

@Monique Sison , don't expect this place to cash flow while you're living there...or likely when you move out. Here's the number's as I see them:

$2300: GSR
($184): Vacancy
($230): Repairs & CapEx, 10% combined
($320): HOA
($333): Taxes
($100): Insurance - my estimate
(1769): P&I - $390k, 5% down, 4% for 30 years

That leaves you ($636) each month before any utilities. That's not bad as your monthly living expenses. Plus you're building equity and learning to be a land lord. Just don't expect this to cash flow. 

Additionally, you can't just slap a door on a dining room and call it a bedroom. There are legal requirements for a bedroom (must have a closet, window, proper egress in some cases), so that room may not be rentable in the future.

@Jaysen Medhurst this is so helpful, thank you!

I was wondering.. for CapEx, since it is a condo and has HOA fees that include maintenance of the exterior of the building, would you consider budgeting a little less for this?

I think I will pass on this property and continue to live at my parents house and save. Although it’s a good deal and qualifies for BoA’s Home Grant Program ($7500 off non-recurring closing costs), I want to invest in something where I can at least break even.

Either way you choose, gotta buy something. Now may not be a great time for first timers since prices are so high. That just means be ready to buy at the down turn in the economy. 

it's very hard for first timers, but you just need to overcome. You look young. Just don't wait forever.

Another totally different option, go get married then move to where you can afford to buy cheap. Some of us are making money at this, but swimming in millions in debt. Not the funnest place to be. 

What do you want? (This is rhetorical, so don't answer me, answer yourself).

best of luck.

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