Let's talk some small potatoes real estate.
We closed on this property about 3 weeks ago and the tenant moved in today. It's located in South Las Vegas in a good neighborhood. I got lucky and found a retired school supertindent from Phoenix with no pets. He races go karts on the road course.
Purchase Price: $109,500
Down Payment: $21,900
Loan Amount: $87,600 (3.75% Fixed/30 Years)
Closing Costs:$6,400
Fix Up: $8,000
-3,285 Commission
Initial Investment: $33,015
Rent: $1075 Per Month (Under value due to quality tenant)
Mortgage Payment (PITI) $547
Gross Monthly Cash Flow: $528
First 5 Year ROI
Gross Cash Flow: $31,680
Principal Reduction:$8,640
Appeciation (3% Yearly): $16,425
Cash Flow Invested 1% Money Market: $3,168
Realized Gross Gain: $59,913
15 Year ROI
Gross Cash Flow: $95,040
Principal Reduction: $31,320
Appreciation (3% Yearly): $49,275
Cash Flow Invested in 1% Money Market: $9,504
Realized Gross Gain: $185,139
I realize these are gross numbers and don't include repair, vacancy, or taxes. They are attractive numbers regardless.
My plan is to have this property paid in full between my 52nd-55th birthday cash flowing $1000-$1300 a month with a value of approximately $160,000. IF, I don't decide it's time to 1031 the money to a different market due to market forces or relocation.
The property turned out really sharp and way beyond average for our rental market. That required a larger initial investment but I feel it will cost me less vacany and less fix up over the years. I know that the best properties attract the best tenants. I also realize that the rental market will take a turn for the worse in the foreseable future. I want the cream of the crop.
Ironically, after I closed the deal with the tenant today, my 2nd property recieved short sale approval this morning. We plan to close by the end of the year.
