All Forum Posts by: Roy Peer

Yes, vacancies aren't factored in, but most homes are rented within 5-21 days in this area.

Lawn care & Utilities are taken care of by the renter.

Okay, lets get into some numbers:

INVESTMENT: Purchase Price (4B/3.5B): $320,000

• Initial 3% Downpayment: $9,600
• Eventual (Once Built) Remaining 7% + $10k closing costs: $32,400
• TOTAL COSTS TO ACQUIRE: $42,000

INCOME:

• Rent (based on today's rents in the neighborhood): $2,400/mo, $28,800/year

EXPENSES PER MONTH:

• PITI (w/o PMI, assuming continued growth, not a dealbreaker if still in play): $1,615
• CapEx, Matinence, Misc ($100 each): $300
• TOTAL: $1915

CASHFLOW:

• Rent ($2400) - Expenses ($1915) = $485/mo, $5,820/y
• Return: 13% yearly on $42,000 Initial investment. (11% if PMI still active)

Agreed that you could lose a lot if the plan is to sell, but I would be looking at this strategy for rental properties only, if rents in the area are already $500/mo over the mortgage and expenses (PITI) wouldn't a housing crash drive rents even higher?

Keep in mind, the area with this rent to mortgage ratio is super hot and fixers and new developments are selling at roughly the same price because of the bidding wars on fixers/existing homes.

Worst case scenario you could pull out of the contract and just lose the 3% if the market falls if you were planning on just selling.

I recently visited a new development and spoke with a sales agent. They said we could lock in the price of a soon-to-be-built lot (9 months, SFH) for 3% (house and land included). This got me thinking. The area (in Florida) in which they're building has appreciated 15%+ YOY the last 3-5 years.

So, why wouldn't someone do this:

Put down deposits on multiple future homes at 3%. (Yes, you're locking that money in, but you have no holding costs, mortgages, upkeep).

Lock in the price of the lot at current pricing. Let the builder know you're planning on purchasing using. 10% down.

Wait 9 months until it's built.

When the home is built, put down 10%, then immediately refinance at current appraisal (hopefully 20% LTV) pulling out 10% to buy more and now owning a rental?

Am I crazy? What am I missing?