Posted by Soapymac on December 15, 1998 at 18:07:59:
I’m going to walk you through the steps as if you were one of my investor clients:
15% down-------->($ 23,400)
= Loan Amt. of–> $132,600
30 yr., 8.9% = $ 1,057.40 PI X 12 = $12,688.80 Annual Mortgage
Your post does not mention any expenses…and here is where you must supply the rest.
Now,because you do not list the expenses, I’m going to do this in REVERSE:
Annual Gross Rents----------> $ 28,140.00 ($2,345 X 12)
Annual Mortgage Payment----->($ 12,688.80) ($1,057.40 X 12)
Amt. Remaining + Cash Flow–> $ 15,451.20
The $15,451.20 figure must cover the following:
Taxes, maintenance (pay yourself for unplugging the toilets), repairs, vacancy (minimum of 5% of total gross), advertising costs, utility responsibilities that you as a LANDLORD must pay (water, sewer), and insurance on the building.
I may have left some local items out (each area of the country is different, but you get the idea.) That being said, IF (big word) you can pay all those and still have enough cash left over such that you consider the property worth buying, then start negotiating for a lower purchase price.
As always, I will leave myself open to correction by the other members of this board.