My 2nd deal is done - 1st one in Atlanta

[Mel Park]

It's not a home-run.  Yes, leveraging would be a better return - but I'm 46, retired, no W-12 income. Gonna work with a broker to get future mortgages, but for varied reasons I needed to invest some cash.    

Metro Atlanta - Acworth.  3bed/2.5bath townhome. 

Asking Price: 240,000. Purchase Price: $248,000. After closing costs: $251,000 rounded-up. (some of this was HOA dues, property taxes, so not closing fees per say) Needed *nothing* but $100 worth of L.E.D lights.

Property Manager advertised the rental for 2 weeks - we got less applicants then anticipated buy 2 were strong.  Settle one a tenant:   The guy has relocated often, Young 30 something, 2 degrees, working in his degreed-field for 6 years now.   FICO is 850, did (1)landlord reference which came back good.   Property Manager has 70 properties - he felt good about this tenant. Terms of lease:

$1800 per month. + $25 monthly trash removal. (Included in my HOA dues)

*2 year deal - at the end of 12 months, rent goes to $1,900.   1st month+  $2100 security deposit.  My calculations:

$21,600 gross rent

-2,100 manager

-2,300 taxes (rounding up)

-1,600 insurance (rounding up - $500k liability)

-900 yearly repairs (call the plumber, or A/C dude, etc)

-$1900 yearly accrual for things like new appliances, carpets, A/C units - as time goes on.

-$500 CPA (I plan to have 5 rental homes....I figured $2500 yearly CPA divided by 5 including my DC rental)

-$500 travel (1 trip to ATL every 2 years. $2000 expense divided by 4 homes)

-$1500 vacancy (1 month vacancy each 2 years.  $1900 lost rent+$900 broker fee+ $200 utilities = $3000=$1500 a year)

-$150  Misc:   Ancillary stuff. Could be Fed-Exing something, etc)

-$1700 HOA (rounding up. - Roof, siding, landscaping is theirs)

Profit: $8,450 divided by 250,500 =  about +3.4% per year cash flow. 

(Yes, a share of stock yields more - but I'd like diversity and some bricks. Also, depreciation of bricks - means my dividends are taxed at 0% since technically I have a business making almost no profit.)

Of course, this is without appreciation, AND without a 2008-style crash.    

*IF* over the next 5-7 years, this appreciates an average of 3% per year, I've done what I needed vis a vis ROI. IF less than 3%, well, my investment is a bit suckier than hoped for. Any appreciation more than 3% makes me a happy guy.

Anyhow, those are the details.