How to Calculate for Investment Scenarios

[David W.]

Hello! 

So how can I understand the numbers better or what does everyone do to make sure you are making the best decision? My scenario is I am putting in an offer for the following but not sure if I will have greater potential buying smaller cash flow properties. 

Putting in an offer for a single family residence 4 bed, 3 bath, 1954 sqft, 8000 sqft lot, just down the street from my house for $610,000 with a full doc loan at about 6-7% 30 fixed (so lets do 6.5%) 20% down. Property tax is 1.25% and homeowners is about $100 per month. Will need about $30,000 in fixes and my goal is to rent out all 4 rooms to roommates and live just down the block at my house which I am already doing the same successfully. 

$900 x 4 = $3600 in rent. 

PMI is $3820 so I am paying in about $300 a month out of pocket in this scenario but can ride appreciation in future as the house will appreciate on average 5% per year historically in the area

So how do I use this scenario to match up against buying cash producing no appreciating properties such as a 2plex that can be bought for $77,000 and rented out at $600 per unit etc

I'm just getting lost with numbers and fearful of not making the "wise decision"

[Steve DellaPelle]

Hi @David W.! 

I'll start by saying that this idea of buying a single family house with no cash flow and banking on appreciation is a BAD idea. Never invest based on that alone.

If scenario 2 cash flows then there is no matching up...scenario 2 wins...every. time.