From: "John A. Weeks III"
Newsgroups: misc.invest.real-estate
Subject: Re: rental property
Date: Fri, 27 Apr 2007 09:52:20 -0500
In article <1177684588.781249.263510@t39g2000prd.googlegroups.com>,
jIM wrote:
> I found a property which I am considering to use as a rental.
>
> Renters will be college students.
> College runs 48 weeks a year (12 week semesters)
>
> I calculated costs of a 30 yr fixed mortgage (150k, 7%) as $997/mo
> I am estimating property taxes at $6000/year
> I am estimating house insurance at $1000/year
> The "cost", outside of repairs, is estimated at around $13,000/yr
>
> I spoke with a person which goes to school there, he told me students
> pay around $1200/mo for off campus housing now. It appears this would
> generate $17,000 of income, with $4000 profit per year.
In order for a rental property to make sense, you have to
get at least 1% of the property value per month in rent,
and 1.5% is much more ideal. In this case, $15,000 rent per
year would be the bare minimum before considering anything
else. It looks like you have that. Next step would be to
consider all the expenses and risks. What licenses do you
need, what utilities do you need to pay, and what will it
cost for replacements of appliances (every 7 years), carpet
(every 5 years), painting (every 2 years), new roof (every
25 years), new driveway, sidewalk shoveling, lawn mowing,
window washing, service calls for plumbing, fuses, etc.
The bottom line is that if you have $150K, you can put it
in the bank and make $6,000 a year in interest with zero
risk, zero liability, and zero work.
What on earth would you want to borrow $150K, do all this
work, take on all the risk and worry, and then only have
it be break-even or even a small loss each year?
-john-
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John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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