Condo Rental Analysis

[Monique Sison]

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!

[Jaysen Medhurst]

@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.