First Investment Coming Up! - Posted by Arlene

Posted by Tim (Atlanta) on August 07, 2001 at 12:54:03:

From your post it looks like you have not taken into account any vacancy. Have you considered maintenance too? I know the units are new, but they may require some mantenance, just not as much as older units. Have you considered any association/condo fees?

In my personal opinion, $150 per month positive cash flow excluding vacancy and maintenance is far too small for me in the rental market. I normally look at a deal where I net $200 per month per unit after all expenses including mortgage, maintenance, taxes and vacancies. It depends on your own preferences here.

Have you checked to see what comparable units in the area rent for? How sure are you that the unit can be rented for what you expect?

Just some questions to ask yourself before you jump on this one. Normally real estate investors buy rentals below market to hold. Usually new homes are not that much below market.

First Investment Coming Up! - Posted by Arlene

Posted by Arlene on August 07, 2001 at 12:24:09:

I think I’ve found it! But, after working all the numbers I still need a boost of confidence. Please help.

2 New units are available (2/2) at close-out prices with closing costs picked up by the developer. Shall I buy the 2 with 10% down on each (passing the PMI to the tenent) or wait to see if I like this business?

After all costs associated to the unit, I would realize a $150/month positive cash flow on 1 unit with 20% down. If I bought 2, then my cash flow would be less/unit but my cash out of pocket / unit is less too. How do I figure the return on my investment and the vacancy rate (does that become an added expense too?)…need a little help on this one.