Really That Expensive?
I just found this description of a property. I see a lot of people here say that a $200/mo positive cash flow makes a property worth it. Are these actual repair costs do you think or does it include depreciation???
If this is repair costs, it seems like a money pit. It was built in 1920 and is 3200sq 4 unit.
Priced to move - owner will hold 20% of second and pay allowable concessions with an acceptable offer. Expense information from Schedule E tax returns for past 7 years available. Roof replaced with a tear off in 1998 (main roof). All utilities & water separate. Owned by current owner for 20+ years. Expenses for last 5 years are: 1999 = $7,070, 2000 = $7,190, 2001 = $6,942, 2002 = $6,712, 2003 = $7,524.
I would guess that these expenses are operating expenses which would include property taxes, hazard insurance, maintenance, repairs, and may even include professional property management fees. Operating expenses do not include depreciation or any debt service payments.
Unless you can confirm that these expenses also include mortgage interest, assume that these numbers apply to a free and clear property that is fully depreciated.
So, the only real positive cash flow would be above $600/mo. right?
Depends upon your cost of financing.
Cash flow = (Net Operating Income) - (Debt Service)