Real Estate Rental return calculations. Advice please.

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Boglemama
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Real Estate Rental return calculations. Advice please.

Post by Boglemama » Tue Apr 09, 2013 7:06 pm

I have been researching buying a property to rent. I had thought that the returns that I was projecting were higher than they should be, but I read a Bogleheads real estate thread that referenced a Zillow article about different areas of the country being better to buy or rent, and found that the Midwest, where I live, is a great area to buy (and rent out).

Can someone please tell me if I am calculating this correctly?

75K property (3 BR)
18750 down
56250 financed
12000 annual rent (1000 mo)
4680 annual costs: 265 mortgage, 50 taxes, 25 HO insurance, 50 msc.= 390 monthly
7320 clear annually
39.04% return: 18750 invested into 7320 clear

I had heard that this is called "cash on cash return". Or should use a different formula?

littleken
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Re: Real Estate Rental return calculations. Advice please.

Post by littleken » Tue Apr 09, 2013 8:11 pm

It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.

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SnapShots
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Re: Real Estate Rental return calculations. Advice please.

Post by SnapShots » Tue Apr 09, 2013 8:15 pm

If you can get $1,000 per month on a $75K rental property, I would buy more of them.
the best decision many times is the hardest to do

ourbrooks
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Re: Real Estate Rental return calculations. Advice please.

Post by ourbrooks » Tue Apr 09, 2013 8:30 pm

You've probably underestimated two significant items:

1. Repairs/upkeep. Think about a new roof and a new furnace every 20 years. Think about new carpet every 10 years minimum if you're going to get top rent. Think about at least an annual plumber's visit to repair leaky faucets and whatnot. Think about a new coat of paint between tenants. I doubt whether $50 a month will be enough; a minimum of $3,000 a year is more realistic.

2. Vacancies. You might get good tenants who stay for decades; you might get good tenants who stay for a year or two and then move. Believe it or not, the national vacancy rate in 2012 was 8.6%.

If you're lucky, you might clear $4,000 a year. It might still be a good deal, though, especially if you hang on to it for a decade or two. Even if the price doesn't rise much, the tenants will be paying the mortgage and increasing your equity.

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Tue Apr 09, 2013 8:34 pm

littleken wrote:It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.
To answer your questions:
-The 75k does not include closing costs. I would roll them into the mortgage.
-Mortgage is 30 year fixed at 3.875%
-I don't know what portion of the property value is depreciable. I am assuming that I would calculate that by using the land and home value?
-Utilities are paid by tenant. The $50 misc expense covers maintenance costs.

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Tue Apr 09, 2013 8:41 pm

SnapShots wrote:If you can get $1,000 per month on a $75K rental property, I would buy more of them.
Cha ching! :moneybag That is exactly what I thought after doing the math. I'm just wondering if I missed something, which is why I would greatly appreciate your advice. Here is a Zillow article about how areas of the country differ in how beneficial it is to rent or buy. The midwest is better to buy but a lot of people don't have the down payment, so renting is necessary. Rents are high compared to property values in my area.

http://www.zillowblog.com/research/2012 ... lling-you/

Twins Fan
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Re: Real Estate Rental return calculations. Advice please.

Post by Twins Fan » Tue Apr 09, 2013 8:49 pm

Looks pretty close.

Although, don't think of it as investment/return... think of it as a business with expenses and income. You pay taxes on anything you actually clear as income. You also get to deduct a bunch of stuff for taxes. So, that all depends on the yearly numbers.

Also, think seriously about the maintenence costs ourbrooks listed. That is much more realistic than $50/mo. over the long run.

How much work is needed to the $75K property when you buy it to get it ready to rent... carpet, paint, appliances, etc.? That is all deductable, but money you would pay up front.

Lots more to it than just running some numbers and liking the "return" you see.

I am a landlord due to some unfortunate circumstances. I wish I wasn't. Some people like having rental properties though.

littleken
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Re: Real Estate Rental return calculations. Advice please.

Post by littleken » Wed Apr 10, 2013 12:02 am

Boglemama wrote:
littleken wrote:It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.
To answer your questions:
-The 75k does not include closing costs. I would roll them into the mortgage.
-Mortgage is 30 year fixed at 3.875%
-I don't know what portion of the property value is depreciable. I am assuming that I would calculate that by using the land and home value?
-Utilities are paid by tenant. The $50 misc expense covers maintenance costs.
Seems like a very good buy based on the information given. Yes, on depreciation, the land value is not depreciable.

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White Coat Investor
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Re: Real Estate Rental return calculations. Advice please.

Post by White Coat Investor » Wed Apr 10, 2013 2:09 am

Boglemama wrote:I have been researching buying a property to rent. I had thought that the returns that I was projecting were higher than they should be, but I read a Bogleheads real estate thread that referenced a Zillow article about different areas of the country being better to buy or rent, and found that the Midwest, where I live, is a great area to buy (and rent out).

Can someone please tell me if I am calculating this correctly?

75K property (3 BR)
18750 down
56250 financed
12000 annual rent (1000 mo)
4680 annual costs: 265 mortgage, 50 taxes, 25 HO insurance, 50 msc.= 390 monthly
7320 clear annually
39.04% return: 18750 invested into 7320 clear

I had heard that this is called "cash on cash return". Or should use a different formula?
Wow! $12000 rent on a $75K property? If you don't want it I'll take it. Assume a 55% of 12000 net operating income, that's a cap rate of 8.8%. The ones I've been looking at around here are at 5.2%.

Cap rate is NOI/value. Leveraged cash on cash return depends on your financing. If the mortgage is $265*12= 3180, then your income is 3420 on an investment of 18750, or a leveraged cash on cash return of 18%. Add in some appreciation, a little depreciation, and the amortization of your loan, and you may be looking at one fine investment there.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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White Coat Investor
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Re: Real Estate Rental return calculations. Advice please.

Post by White Coat Investor » Wed Apr 10, 2013 2:10 am

littleken wrote:
Boglemama wrote:
littleken wrote:It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.
To answer your questions:
-The 75k does not include closing costs. I would roll them into the mortgage.
-Mortgage is 30 year fixed at 3.875%
-I don't know what portion of the property value is depreciable. I am assuming that I would calculate that by using the land and home value?
-Utilities are paid by tenant. The $50 misc expense covers maintenance costs.
Seems like a very good buy based on the information given. Yes, on depreciation, the land value is not depreciable.
I thought depreciation was calculated based on purchase price of the entire property. Did I miss something in the IRS regs? Can you cite a source?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

littleken
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Re: Real Estate Rental return calculations. Advice please.

Post by littleken » Wed Apr 10, 2013 2:20 am

EmergDoc wrote:
littleken wrote:
Boglemama wrote:
littleken wrote:It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.
To answer your questions:
-The 75k does not include closing costs. I would roll them into the mortgage.
-Mortgage is 30 year fixed at 3.875%
-I don't know what portion of the property value is depreciable. I am assuming that I would calculate that by using the land and home value?
-Utilities are paid by tenant. The $50 misc expense covers maintenance costs.
Seems like a very good buy based on the information given. Yes, on depreciation, the land value is not depreciable.
I thought depreciation was calculated based on purchase price of the entire property. Did I miss something in the IRS regs? Can you cite a source?
http://www.irs.gov/publications/p527/ch ... 1000219050
Section "What Rental Property Cannot Be Depreciated?" and "Separating cost of land and buildings."

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Wed Apr 10, 2013 6:56 am

EmergDoc wrote:
Wow! $12000 rent on a $75K property? If you don't want it I'll take it. Assume a 55% of 12000 net operating income, that's a cap rate of 8.8%. The ones I've been looking at around here are at 5.2%.

Cap rate is NOI/value. Leveraged cash on cash return depends on your financing. If the mortgage is $265*12= 3180, then your income is 3420 on an investment of 18750, or a leveraged cash on cash return of 18%. Add in some appreciation, a little depreciation, and the amortization of your loan, and you may be looking at one fine investment there.
Thank you! That's exactly what I thought. I have been researching the market in my area and these figures are realistic. These aren't for a specific property, but an average. I have a friend who just bought a HUD home (her first rental property) for 10k, put 11k into it, and it's now worth around 30k. She rents it for $600 monthly for a 21k house. It took her 2 weeks to rent it and she had her choice of renters.

It seems that people really aren't money savvy in the Midwest. Paycheck loan stores and appliance rental stores abound. I have a friend who has been renting an 80k house for 17 years! Yikes! A realtor friend who has almost 30 investment properties said that people just don't have the cash. Thanks to good money habits, and years of reading Bogleheads, I am in a position to take advantage of a great opportunity. (I just want to make double, triple sure that I am crossing all t's and dotting all i's)

Please give me any additional advice! I am learning all that I can to ensure that I make good real estate choices.

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Wed Apr 10, 2013 6:59 am

Twins Fan wrote:Looks pretty close.

Although, don't think of it as investment/return... think of it as a business with expenses and income. You pay taxes on anything you actually clear as income. You also get to deduct a bunch of stuff for taxes. So, that all depends on the yearly numbers.

Also, think seriously about the maintenence costs ourbrooks listed. That is much more realistic than $50/mo. over the long run.

How much work is needed to the $75K property when you buy it to get it ready to rent... carpet, paint, appliances, etc.? That is all deductable, but money you would pay up front.

Lots more to it than just running some numbers and liking the "return" you see.

I am a landlord due to some unfortunate circumstances. I wish I wasn't. Some people like having rental properties though.
I absolutely agree with you that landlording is a business. My parents have one vacation rental and I have a friend who has many investment properties, and one who just started with her first. I have no delusions of sitting back and cashing checks while not doing any work. Although, my friend with almost 30 units works 15 hours a month and has one part time employee. I could handle the income that they make for only 15 hours a month. :wink:

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White Coat Investor
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Re: Real Estate Rental return calculations. Advice please.

Post by White Coat Investor » Wed Apr 10, 2013 7:55 am

littleken wrote: http://www.irs.gov/publications/p527/ch ... 1000219050
Section "What Rental Property Cannot Be Depreciated?" and "Separating cost of land and buildings."
Thanks. Looking back at my taxes I did it the right way but had apparently forgotten that in the mean time.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

rogermexico
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Re: Real Estate Rental return calculations. Advice please.

Post by rogermexico » Wed Apr 10, 2013 10:39 am

Also this is partly a job so I'd factor out the value of any labor you will contribute from your ROI (because it's natural to compare this ROI to index funds which isn't really valid). For me it's usually several hundred hours up front bringing building up to my standards, and then maybe 10 hrs per year while occupied. Plus some time on bookkeeping/taxes.

allenneal99
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Re: Real Estate Rental return calculations. Advice please.

Post by allenneal99 » Wed Apr 10, 2013 12:47 pm

You should run your numbers with lower monthly rental income amounts (800, 700, 500, 300) and run it with 0 rental income to see how long you will last in case you have to carry the rental without a renter. I would do a worse case scenario of 12 months of no renter just to see. Call this the contingency plan.

Where I live a $75k house is either a) in a less than desirable neighborhood or b) out in the sticks. This would not be in a neighborhood that is up-and-coming, or near downtown or a large university, unless it is a tear-down.

I do not think you can command $1000 per month out of it, I'm thinking more along $500-$750. I could be wrong, but you need to consider that the property is a $75k house for a reason. Forget what Zillow has to say. Renters in a neighborhood could be paying different rental values all over the map. You won't really know unless you knock on each door and ask them.

You may also want to factor in some "unforeseen" renovation costs. You mentioned your friend purchased a $10k HUD home and put $11k into it. That sounds great on the surface, but she put into renovations exactly what she paid for it. Could you absorb a similar ratio of costs? Imagine needing to put an additional $15k or $30k into your $75k property because it may need this, this and that, just to get it to a livable condition.

tj
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Re: Real Estate Rental return calculations. Advice please.

Post by tj » Wed Apr 10, 2013 4:32 pm

Boglemama wrote:
littleken wrote:It would be beneficial if you provide some of the info below:

Does the 75k include closing cost?
What are the terms of the mortgage or loan? What is the interest rate and how long is the loan?
What is the portion of the property value that is depreciable?
Are you going to pay utilities for the tenant? Is it part of the $50 misc expense?
Does the $50 misc cost covers maintenance cost?

Also, make sure you factor in potential vacancies.

On the surface, it seems like a good buy.
To answer your questions:
-The 75k does not include closing costs. I would roll them into the mortgage.
-Mortgage is 30 year fixed at 3.875%
-I don't know what portion of the property value is depreciable. I am assuming that I would calculate that by using the land and home value?
-Utilities are paid by tenant. The $50 misc expense covers maintenance costs.

Where are you getting such a low rate for an investment property?

Twins Fan
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Re: Real Estate Rental return calculations. Advice please.

Post by Twins Fan » Wed Apr 10, 2013 4:37 pm

I believe it... 3.875%.

I'm refinancing my investment property right now and getting a 30 year fixed at 3.75%. It's a good time now for this sort of thing... rates are LOW!!

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Wed Apr 10, 2013 7:16 pm

Our credit union has great rates!

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SnapShots
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Re: Real Estate Rental return calculations. Advice please.

Post by SnapShots » Thu Apr 11, 2013 5:08 am

Maintenance costs depend on the age of the property, appliances, heat and air system, exterior and interior painting, etc. If things aren't too old, $600 a year is a good estimate. Some years it will be more. Others it won't be much of anything.

If you have a high turnover rate in tenants, it cost more. You have to clean the unit, may have to repaint, repair things, may lose a couple of months to find a new tenant and get the place ready to go.

Your deduction on depreciation is based on 27.5 years for a residential rental property.

A couple of tips. When you replace carpet, replace it with tile or a laminated wood. You'll never have to replace it or clean it again. I'd put it in every room. Mop and your good to go. Tenants can buy area rugs.

Install door locks so that tenants have to use their key to lock the door from the outside. That way you don't get called in the middle of night because they've locked themselves out. And, so they don't have to Kung Fu the door to get in, as a tenant once said he had to do when I asked why the door frame was in shreds.

Get a good deposit, appropriate for your unit and area. Tenants will take better care of their property because they want their deposit back.

Be demanding and make tenants pay on time. If you give an inch, they'll push and push until they are eventually a month behind.

Take care of your tenants. When they call fix things immediately. They'll stay longer. Refer their friends. And, take better care of the property if you're taking care of it and like you. Send them a thank you and Christmas gift (box of candy), if they've been good tenants

Good Luck. $1K/mo is great rent. $700/mo is great rent for $75K. :sharebeer
the best decision many times is the hardest to do

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SnapShots
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Re: Real Estate Rental return calculations. Advice please.

Post by SnapShots » Thu Apr 11, 2013 7:43 am

allenneal99 wrote: Where I live a $75k house is either a) in a less than desirable neighborhood or b) out in the sticks. This would not be in a neighborhood that is up-and-coming, or near downtown or a large university, unless it is a tear-down.
I live in a rural-urban type town with a major university, population almost 50,000. Half are students. A tear down would sell in the $100k plus++ range, if it's near the university. Probably, 80% of the local population owns rental property. As I type, thousands are new rental-rooms are being built in mega apartment complexes throughout town. This is a cycle that happens about every 10-15 years. There's no where to make money (except in the stock market casinos), and people are back into real-estate, over building.

I just looked at buying a four-plex for $285K. Each 750 sq ft, one bedroom unit rents for about $700/mo. I was too late, as all 15 of the four-plex units have sold to investors, and not all are even built yet.

New construction has pushed rental rates up, but they don't usually appreciate annually because of competition. In fact, sometimes they decrease.

Annual incomes are on the low-end in my state and hometown. I've never heard of $1,000/mo rental rates on even high-end rentals, unless its large enough for 2-3 unrelated persons to live together.

In Crested Butte, CO, where we have a second home. Rental rates for condos costing $500K cannot command $1,000/mo long-term rates, because the local population is poor, unless numerous individuals live together. You can get more on short-term rentals but can only lease them a few weeks, may months out, of the year.

It is interesting you can buy something for $75K and have a population wealthy enough to pay $1K in rent.

Are you in a new oil production area?
the best decision many times is the hardest to do

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Thu Apr 11, 2013 1:40 pm

SnapShots wrote:
allenneal99 wrote: Where I live a $75k house is either a) in a less than desirable neighborhood or b) out in the sticks. This would not be in a neighborhood that is up-and-coming, or near downtown or a large university, unless it is a tear-down.
I live in a rural-urban type town with a major university, population almost 50,000. Half are students. A tear down would sell in the $100k plus++ range, if it's near the university. Probably, 80% of the local population owns rental property. As I type, thousands are new rental-rooms are being built in mega apartment complexes throughout town. This is a cycle that happens about every 10-15 years. There's no where to make money (except in the stock market casinos), and people are back into real-estate, over building.

I just looked at buying a four-plex for $285K. Each 750 sq ft, one bedroom unit rents for about $700/mo. I was too late, as all 15 of the four-plex units have sold to investors, and not all are even built yet.

New construction has pushed rental rates up, but they don't usually appreciate annually because of competition. In fact, sometimes they decrease.

Annual incomes are on the low-end in my state and hometown. I've never heard of $1,000/mo rental rates on even high-end rentals, unless its large enough for 2-3 unrelated persons to live together.

In Crested Butte, CO, where we have a second home. Rental rates for condos costing $500K cannot command $1,000/mo long-term rates, because the local population is poor, unless numerous individuals live together. You can get more on short-term rentals but can only lease them a few weeks, may months out, of the year.

It is interesting you can buy something for $75K and have a population wealthy enough to pay $1K in rent.

Are you in a new oil production area?

LOL! Absolutely not. No oil here.

Twins Fan
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Re: Real Estate Rental return calculations. Advice please.

Post by Twins Fan » Thu Apr 11, 2013 2:33 pm

I've been wondering where you're located also. You mentioned the friend buying a home for $10K or so. You in Detroit? :D

gerntz
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Re: Real Estate Rental return calculations. Advice please.

Post by gerntz » Thu Apr 11, 2013 8:03 pm

Don't you also make the montly principal paydown on the mortgage? You don't see it till you sell, but it's an unrealized cap gain.

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SnapShots
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Re: Real Estate Rental return calculations. Advice please.

Post by SnapShots » Sun Apr 14, 2013 8:59 am

The situation you're describing is very unique. Extremely low cost housing and a wealthy renter who can pay $1,000/mo on a $75K rental, yet cannot get a home loan.

I'm wondering now if this OP is for real.
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Re: Real Estate Rental return calculations. Advice please.

Post by lovesfourleggedgirl » Sun Apr 14, 2013 11:02 am

Hi. First post. I grew up in Seattle, grad school on the east coast, and now I live in the Midwest. I own investment property, primarily duplexes, and I feel I have some perspective on the trends/prices from one area to another (emphasis on "some"). I've developed a good philosophy to combat homesickness for the PNW: no mountains here, no ocean, but there are occasional, screaming investment deals. My concern with the OP's calculations are that the figures for taxes and insurance seem very low. My best deal so far is a pretty brick duplex, good neighborhood, for $75K including closing costs. I put $10K into it. It yields monthly rent of $1230. However, my taxes are about $950 a year (and I consider those low...I live in an income tax state) and my annual insurance premium runs about $1100...I tend to buy the most comprehensive coverage I can. I am sure investors could purchase cheaper insurance, but your quote, OP, seemed unusually low. I would be concerned about your level of coverage at that rate. Also, this might be helpful...I do not buy single family houses, as I don't feel they yield enough, but I have many friends who do. One friend purchased a two bed/1bath home in a pretty good neighborhood in our town for $85K, put $10K into it, and it now rents at $950. Those numbers aren't in the OP's range, but they aren't bad. Good luck.

WhyNotUs
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Re: Real Estate Rental return calculations. Advice please.

Post by WhyNotUs » Sun Apr 14, 2013 11:59 am

I ran your scenario through a spreadsheet and it falls into the category of "too good to be real". I added in vacancy deduct of 8%, slightly increased your proposed expenses and still get a cap rate over 12 and cash-on-cash of 30%. If this is real, then it is a green light.
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patriciamgr2
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Re: Real Estate Rental return calculations. Advice please.

Post by patriciamgr2 » Sun Apr 14, 2013 5:08 pm

I have three suggestions to add:

1. Please be sure that you have verified the projected rental income with a third party (ie not the current owner or either realtor who will make money on sale). Check with a property management company for how much they'd list it for & what sort of nonpayment & eviction stat's they're experiencing. [In many markets right now, investors awash in liquidity are driving prices up; the "story" about why this property is priced so low relative to rents wouldn't be accurate in my market. Of course, your area may not have attracted investor interest yet.]

2. Ask your home inspector to prepare a replacement schedule for all major elements (e.g. how long does the roof have left; how about appliances, HVAC, water heater; etc.). Run your numbers assuming that you need to set aside money to cover those future costs.

3. I'd suggest reading through sites like Mr.Landlord (I have no affiliation), just to get an idea of the bizarre/nefarious behavior some tenants exhibit. In my experience (despite my cautionary tone, my ex & I made $ in real estate), most tenants are truly lovely people. The only issue is that if they're good tenants, you hate to raise their rents.

Best of Luck.

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SnapShots
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Re: Real Estate Rental return calculations. Advice please.

Post by SnapShots » Mon Apr 15, 2013 8:02 pm

The OP appears to have left the conversation. I think this too-good-to-be-true question was ruse. :annoyed
the best decision many times is the hardest to do

Boglemama
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Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Tue Apr 16, 2013 9:16 am

SnapShots wrote:The OP appears to have left the conversation. I think this too-good-to-be-true question was ruse. :annoyed
It most certainly was not a ruse and here I am! I have just been ignoring any posts that were counterproductive. I asked an honest question to get advice and suggestions, not deal with bs.

I am extremely grateful for the wonderful advice from some posters. I will definitely get a third opinion on rental rates regarding any property that I am interested in purchasing. I plan to have my realtor show properties and then have a property manager go with me to properties that I am interested in to let me know what SHE thinks that the rent would be. Thanks so much!

rogermexico
Posts: 161
Joined: Tue Jan 08, 2008 5:58 pm

Re: Real Estate Rental return calculations. Advice please.

Post by rogermexico » Tue Apr 16, 2013 12:44 pm

If you don't know the rental market well, check craigslist .. find nearby properties of comparable quality (based on pictures, etc.) and see what the listed rents are. You can even e-mail those landlords and ask specific questions about that rental marekt. You can also call the same people back in a couple of weeks and see if and how fast they were rented... if higher than market they'll tend to still be available.
I do this type of check at every tenant turnover and one can price things pretty effectively this way.

Boglemama
Posts: 295
Joined: Thu Apr 28, 2011 7:27 am

Re: Real Estate Rental return calculations. Advice please.

Post by Boglemama » Tue Apr 16, 2013 1:29 pm

That's an awesome tip Roger! I will check Craigslist and start calling rentals in my area. What a perfect way to get an unbiased opinion about what the going rents are.

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