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Updated over 7 years ago on . Most recent reply

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Emrah Latic
  • Utica, NY
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First time Investor-I have a few questions, can you answer them?

Emrah Latic
  • Utica, NY
Posted

Hello everyone, first off I want to thank everyone ahead of time for any insights and advice that you guys can give me. My name is Emrah and I am 21 years old. I want to expand what I do and I want to start investing in Real Estate because I have a strong appreciation for it and at this day in age, I feel like its a smart choice. Currently, I am looking at a property near me that is worth $79,000, the property is fully renovated and is located near a College. It is a multifamily home (2 Units) with a lot of potential. From these 2 units, I can potentially rent them out at $800 each bringing me in at $1,600 a month. I was only thinking about putting down a $5,000 down payment as well with a 15 year loan at 4.062% interest and an estimated $4,000 closing cost. My calculated mortgage cost would be around $1,217 a month, with other expenses like property management, garbage, etc. Bringing in a total of $1,600, that gives me $383 in cash flow per month. I am just starting out and learning all of this and I would like to start with a smaller property to get my feet wet. Also, I am still learning all of the calculations and I am trying to figure out what numbers I need to look for. Below, I have attached a link of the property so that you may take a look as well. If at any point I made a mistake in the calculations please let me know as I would love to correct them.

https://www.zillow.com/homes/for_sale/apartment_du...

Thanks,

Emrah

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Brian Adzadi
  • Allentown, PA
404
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Brian Adzadi
  • Allentown, PA
Replied

@Emrah Latic

People like you are what makes me believe there may actually be hope for the coming generation. Good for you kid. I wish I was as prudent as you when I was your age.

Anyway, the house looks great and the numbers look right. I just have some questions and suggestions for you.

Since its near a college, how easy is it do you think turn it into a rental for college students. With college rentals, you can rent it by the room instead of by the unit. So its looks like it is 3 beds in each unit. You can either charge $300-400/per room, so with one unit alone you are renting it for a minimum of $900. College kids tend to rowdy and careless but you have a property manager to take care of. Just know that since each college year brings in new students, there is a high turnover rate and its up to you how well you can handle that.

Another thing is why are you taking out a 15 year loan? Why not a 30 year? Although the interest will be higher, your monthly cash flow will be even higher. You don't want to always pay off your property so quickly, because once you do its no longer a liability but now an asset. Uncle Sam loves taxing you for assets.

So if you can turn the property into a college rental and a longer mortgage term, trust me, the cash-flow will be insane.

Happy investing.

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