After Taxes, Mortagage And Hazard Insurance
The + cash flow is only 100 and some odd dollars. Is this worth it? Its a condo that I picked up and want to rent.
This is my first property and I am hoping that I am not making a mistake. When is it worth it. Also, how much is homeowners insurance???
confused,
go to the "properties " tab....click on any state, and then hit analyse on any property. Then fill in your info. It will give you a benchmark as to if it is worth it or not.
For homeowner's insurance... As a basic calculation, take the loan amount and divide by 2400....It will give an approximate monthly HOI.
EX. 100,000 loan / 2400 = @$41.66 a month
This number is accurate within a few bucks up or down.
$100 is fine.
In our area, condos are currently appreciating at 20+% a year since they are the only affordable housing around.
I have not been able to find any that the numbers work after you add in the condo association fee, but if yours still gets you $100/month you are going to be sitting pretty in a couple of years
You are going to want to look into Landlord insurance on this if it is a rental. Have the tenant get renters insurance.
PS. I hate the traffic on 270
smllinvestments,
I tried that 'analyze property' function and couldn't get my property to qualify for a 'buy' no matter what I did. I know my deal is a good one (even though it comes up with the first year as a positive $3000+ net operating income it tells me not to buy!).
Quote:The + cash flow is only 100 and some odd dollars. Is this worth it? Its a condo that I picked up and want to rent.
This is my first property and I am hoping that I am not making a mistake. When is it worth it. Also, how much is homeowners insurance???
mahaynes,
I have several condos in Frederick and one in Germantown. I look at $100+ monthly cash flow as a great starting point for a condo. I hope you are talking true cash flow -- after all expenses, debt service, and association fees. Rents are increasing every quarter in your area, so on your first annual lease renewal you should be able to add $50 more to your monthly cash flow. Add $75 if your tenant is on a two year lease.
Appreciation has been tremendous. The Montgomery County inventory for property on the market under $150K is almost zero. This means that there is a continuous supply of potential renters (a landlord's market) for you because the cost of homeownership is so high. Keep your rent slightly under the market tops, and you will rarely have a vacancy, and even then not more than one month's rent loss.
The landlord policy on my Germantown condo runs about $127 per year. Remember that the association master policy will cover the structure, you only need minimal coverage on your unit to include liability. I suggest no more than $5K building and $2K personal property with $1MM liability.
Thanks for the feedback .
I actually purchased in Hampton Va, but Im sure the same rules apply. I calculated mortgage, taxes, condo fees and I have a little more than 100 a month cash flow.
I feel much better now, thanks a lot.
Hampton should also prove to be a good rental market. You have a large transient population with the military bases in the area, so rental demand should be pretty good.
I have no direct information about the strength of the real estate market, so you may find that rent increases will be a little slower than you might expect in Rockville.
If this property is of relatively recent vintage (1980 or later) and in good condition with strong association management in place, you should expect that this condo will be an excellent addition to your long term holding portfolio.
Find an insurance agent that understands REI and get a solid quote. It is too hard of an insurance market to guesstimate. Local groups are helpful in finding an Agent. Tim
Quote:
On 2004-03-10 08:23, mahaynes wrote:
The + cash flow is only 100 and some odd dollars. Is this worth it? Its a condo that I picked up and want to rent.
This is my first property and I am hoping that I am not making a mistake. When is it worth it. Also, how much is homeowners insurance???
confused,
<IMG SRC="images/forum/smilies/icon_confused.gif"> <IMG SRC="images/forum/smilies/icon_eek.gif">
If the cashflow proves to be $100, I'd have to say it's worth it, I know some landlords making $45 pos cashflow on some of their properties and some that are just breaking even. If you get enough of them, and the home value seems to be appreciating (so will the rent) then think about if you had 20 or more of these properties paying for themselves and paying you $100 each every month.
Ofcourse hoepfully when you have 20 of them you'll have hired a management company and still clear $100 pos cashflow.
JB
[addsig]
For what it's worth, I would be hesitatant to go with this deal based on what litttle information is provided. Is this $100 on a $400/month unit, $600/month unit, $1000/month unit,or more? It makes a big difference. If it's on a $1000/month unit, you are really counting on appreciation. That may be fine, but its a lot like the stock market. The market always gains over time but in every market there are both up and down markets. Real estate is no exception. The down markets almost always occur when things look best. If the housing market does happen to slow down you could end up having to rent a $1000/month unit for $750 for possibly several years. Could you handle that? Just something to think about. I'm not predicting a slowdown, but I do think the odds of prices increasing over the next 5 years are much smaller than the odds of prices decreasing since prices tend to revert to the norm. We are currently considerably above the norm by several different measures.