First rental property with a 3% conventional loan

[Joseph Pichardo]

Good evening all.

I’m wondering if this makes sense and if I’m looking at this the right way.

The property is a 3 family house priced at $210000

I will be putting 4% down.

With PMI and insurance the mortgage will be $1571.

Water and sewage will be $150 a month

and I will also pay $ 100/month for common electricity

The total rent roll is $2700/month

Which nets me $879/mo.

I’m very green when it comes to this. To me this looks like a good deal since will get my down payment and closing cost back in 2 years.

Am I approaching this the right way?. Is there anything else I need to be considering ?

[Casandra M.]

At a minimum, we consider:

• Mortgage P&I
• Insurance
• Property Taxes
• Any utilities (gas electric water)
• General maintenance cost as a % of rents, as a realized cost
• Property management fees if applicable
• Expected vacancy rate as a realized cost (we use 1 month vacancy which is realistic for our area and properties)

Lastly, we amortize a savings plan for the next large piece of maintenance as a monthly expense since we are fairly conservative. So if a roof needs to be done say, about 5 years from the date of purchase, we estimate the cost of replacement and amortize over 5 years as a savings to come out of rent profits. We track this savings amount in a separate savings account for our properties to ensure larger maintenance costs aren't being overlooked or spent on something else.