Real Estate Agent · Haslett, MI · Member since 2018 · 7 posts · 1 vote
I am considering putting an offer in on a duplex. The financials are as follows:
Rent charged $1400 total
Mortgage(land contract monthly payment) $300
Taxes $109
Insurance $72
Mgt Co $120
Utilities (landlord pays one side of utilities) $200
Maintenance $140
Vacancy $140
Cost to payback my $ back to me for down payment $231
Total cost of $1312 each month
That means I'll make $88 a month if everything goes as planned (which it won't) My question is what am I missing here. The cost of the land contract monthly payment is only $300 per month and rent is essentially $1200 because 200 covers utilities. so that is a $900 difference. I feel like I'm not using a correct assumption with something. Any guidance would be helpful. TIA Chuck
Rental Property Investor · Batavia, IL · Member since 2018 · 452 posts · 672 votes
7y
@Chuck Astleford Well the first thing that jumps out to me is losing $231/month for paying back money borrowed for a down payment. How long will it take to pay that back? Once that initial loan is repaid it bumps your cashflow to ~$310/month which sounds about right. The rest of your numbers seem budgeted realistically, so based on what you provided that $231/month is what's dragging down the cash potential in the deal.
Real Estate Agent · Haslett, MI · Member since 2018 · 7 posts · 1 vote
7y
@Scott Passman I see that I did small calculation error. the 231 is actually 191. This is to repay myself over the next 5 years for the money I put into the deal. I was struggling with if this was part of my return since I felt I needed to repay myself for the cost of investing. Thank you for letting me know the other numbers seem realistic.
@Ned Carey thank you. that makes sense. I was struggling with how to categorize that money coming back to me as it will be replenishing the money I used to put down.