Posted by Nate(DC) on June 29, 2001 at 15:09:23:
This is a marginal deal at best. I would not do it. Here is why:
Gross rents 12600
Less vacancy (5%) -630
Less maintenance, repair, management (20%) -2394
Less Taxes & insurance -1950
Your payment on the first trust is $595 per month for principal and interest, plus $34/mo for PMI for a total of $629 per month or $7,548 per year.
Your payment on the second trust will be $45/mo or $534 per year and you will have $8,900 due in one year.
So your total in-flow is $7,626 per year and your total out-flow is ($7,548 + $534) or $8,082 per year. So you will have a negative cash flow of $450 per year AND you will have to come up with the $8900 out of pocket ANYWAY in a year, since the property isn’t generating any case to pay it off.
I don’t see why you would bother with this deal.