Posted by j on September 27, 2010 at 07:02:57:
What do you mean?
Wait, is it this easy!? - Posted by Jonathan napper
Posted by Jonathan napper on September 26, 2010 at 16:29:52:
Okay, I was browsing around and found a commercial property on a main
highway, it has a commercial outlet on the 1st floor, and i think another
commercial on the second floor, with an apartment on the third. Its recently
remodeled, and fully leased. Sale price is $341,000, with a $41,000 yearly
income.
30yr loan, roughly $1100 per month
Income would be roughly $3400
Profit per month roughly $2300
Am i missing something? Get the loan, purchase, and manage, what am i
missing?
Your forumula is whacked… - Posted by JT-IN
Posted by JT-IN on September 26, 2010 at 18:20:54:
Your divide by 360 and add a little equates to a 1.02% 30 yr loan with 0 down payment. How should I break this to you…? That is NOT happening, period.
Compared to reality… what you will likely find for comm’l property these days is a 20 yr amortization, not 30… and a 25 or 30% down payment required. So using reality for your sample property you would need 90K, maybe 100K in liquid cash for down payment and closing costs, and the interest rate will be higher for comm’l property, likely close to 7%… so with a 256K mtg you would have a monthly payment of P&I only of $ 1985.00… taxes are usually 2% annually of the bldg value, so another 7K, or nearly 600 per month and insurance would be 300 to 400 per month, at least. So let me tally that up here… 1985 + 600 + 350 = 2935.00 per month… now factor in appx 3-400 per month for maintenance and amortization, and you are at 3300 per month round figures.
So to recap you get to put down 90K out of pocket and end up with 100 pos c/f per month. How many of those do you really want…? I’m sure there are lots of those out there but few takers.
Makes a BIG difference if you use real numbers, doesn’t it…? Oh sure, one might be able to get a 30 yr loan… and maybe even as low as 6% interest, but that really doesn’t change the number enough to make it a home run, as you indicate in your “erroneous assumptions”.
So to answer your original question; “NO, it isn’t that easy.”
Re: Wait, is it this easy!? - Posted by Jack
Posted by Jack on September 26, 2010 at 16:46:08:
What are the annual property taxes? How did you come up with a $1,100 monthly payment? Do you have 20% for a down-payment?
Re: Wait, is it this easy!? - Posted by Jonathan napper
Posted by Jonathan napper on September 26, 2010 at 17:54:15:
Not sure of the taxes. I just divided the 341k by 360 (947) and added
some more to be cnservative. I dont have %20, but if i did! Would i
purchase this?
Re: Wait, is it this easy!? - Posted by Jack
Posted by Jack on September 26, 2010 at 22:47:15:
Don’t concern yourself with this too much, you will never have 20% to use as a down payment.