All Forum Posts by: Spencer Herrick

Thank you for the reply Basit. My question then is: Do I need to consider the property taxes in analyses if it is already included in the mortgage escrow? In other words, if property tax is escrowed, does it need to be analyzed beyond the mortgage payment to determine ROI?

So my next question would be, is there a particular software you use to assess whether a deal is good deal? Spreadsheet? 

@James Mc Ree the purpose of my question is to learn. I understand your response from the Accounting perspective, but I question whether or not listing the property taxes in addition to the mortgage payment is a redundancy if the property taxes are already escrowed and included in the mortgage payment itself. The "4 Square method" by biggerpockets on Facebook is not a financial document, but rather a tool. The answer to my question, whatever it may be has a huge impact on the value of the cashflow quadrant of this formula. In the case that I'm analyzing, it is a good investment without the property tax in addition to the mortgage, and a bad one with. I just question whether or not the taxes should be on there if they're already escrowed through mortgage. This seems like a redundancy to me. I appreciate the response!

SPENCER

@Frank patalano 
I have up until now been using the Bigger pockets "4 Square method" to determine ROI in rental income properties. However, I seem to question whether or not property taxes should be listed on the "Expense" quadrant in addition to the monthly mortgage if it is already being escrowed from the mortgage payment.

@Frank Patalano

Uncertainty finding the best formula to calculate ROI.

@Michael Craig, but considering a location with higher taxes, this “expense” totals number goes up; hence making your cash flow value go down. My point is, is if it’s already included as part of your mortgage, aren’t you duplicating that’s liabilities value under that quadrant?

That's good to know about the 1 year limited residency on FHA loan. I will have to see about the refinancing to get better rate and dropping PMI.Thanks Michael.

I'm curious to know and understand whether or not you should still consider Total property tax and Mortgage payment as separate expenses on the "4 square method".... in the case that you are having those taxes escrowed from your mortgage payment. Obviously this has a huge effect on the total number of expenses to a rental property and impact the amount of cashflow calculated on a rental property. 

Thanks!

Have a question that I'm unsure of: If My girlfriend ends up moving in after we marry someday, could she rent her house out assuming its an FHA loan that the house is financed on? I know that terms of FHA is that you have to reside in the house. But if it makes sense after I run the numbers, it may offer an option. No plans on this happening any time soon. It's a totally hypothetical.

@Frank Patalano

I’ve been looking at properties for over a year, but struggling to pull the capital together to put the 20% down payment down. Are there good deals for under 30 grand? 6-9 grand is a feasible number for me to save up. Anything over ten is shooting for the moon. I’m very anxious to get the ball rolling, but worried that I’m too far off.