NJ condo $200 cash flow good or bad? Happy Easter

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NJ condo $200 cash flow good or bad? Happy Easter

Nick Patel
Jamesburg, NJ · Member since 2014 · 5 posts · 1 vote

Hello investors - Happy Easter!

I am new to BP and this is my first ever home live with parents and continue doing so.

This is my first investment property in Mercer county NJ
and here are the details.

year build 1983, 1120sqft (well maintain may have to spent 2000 for repair
plus closing cost) (schools rated 5,7,6)

Bank owned forclouser $124000 (4 homes on sale for $160k-$182k range same community)
planning to put 20% - $ 24800 (should i put less down and pay PMI?)
Get loan of                    $  99200 @ 4% 30 (should i go 3.125% at 15yr?)

Mortgate payment    $474
HOA $260
Tax                            $500 ($6000 per year, very high based on price)
Insurance                 $50
water/sewer              ??   (tenant pay in this community)
utilities                       ??   (tenant pays in this community)
Vaccancies                ?? (should i consider? if yes, how much)
repair                         ?? (should i consider? if yes, how much)
other                         ?? (is there any other cost i am missing)
---------------total $1284

Rent $1450 (lower side, my friend is getting 1550 same size condo in same community)

cash flow = $166

Should i buy this or find something else with less property tax and HOA?

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  • Julius King
    New York City, NY · Member since 2016 · 48 posts · 12 votes
    10y
    Do research. Find out what your water/sewer cost will be. You have to consider that. Also have to factor in about 5% for vacancy. Another 5% for repairs. And 8% for capital expenditures.
    0Reply
  • Julius King
    New York City, NY · Member since 2016 · 48 posts · 12 votes
    10y
    Oh and any Cashflow is good. As long as it isn't costing you money monthly your good. A break even is a win.
    0Reply
  • Michael Lee
    Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
    10y

    Hello and welcome to BP! I have heard some bad things about cono's. That being said that looks like a pretty good deal. Just look into the HOA and who is running it. They might raise the rates on you and then you would not have a good deal. Ask around with other people who live there and see what they have to say. If it is just one among many I would be less concerned. A good location can tell you a lot. You might want to consider looking for a Partner that will help you. It's better to get part of something rather than none. If this is your only investment you might ought to walk away and look at something else like a single family home that would be a better rental. Amenities could be better somewhere else so look at that and see if you want to change. Look at your goals and trust your gut feelings. Just make sure you include everything on your estimate and how real it is.

    I am 59 years old and I have some decent experience and knowledge.  I got a college degree in business that emphasized real estate and I have had a broker license for about 30 years.  My father has been buying and selling real estate for about 40 years and he has taught me a little bit.  I have only done one investment that was partially personal.  I have sold it and helped other people on a few deals, both resindential and commercial, so I have some decent experience to give you.  The last 6 months I have spent full time on BP and have learned a lot.  If you think that I can help you please contact me through BP at any time.  Good luck!

    0Reply
  • Nick Patel
    OP
    Jamesburg, NJ · Member since 2014 · 5 posts · 1 vote
    10y

    Thanks Julius and Michael.  

    water and sewer is $90/month 

    but how to calculate 5% vacancy, 5% repairs ?

    what is capital expenditure, do we have to calculate based of what? can you provide example please?

    0Reply
  • Behrooz K.
    Spring Valley, NY · Member since 2016 · 55 posts · 21 votes
    10y

    @Nick Patel 5% vacancy means it will be vacant 5% of the time. So 5% of 365 days is 18 days. 5% of your gross annual income gives you annualized vacancy cost. 5% of your gross monthly income gives your monthly. So your annual vacancy is $870. Divide by 12 to get 72.5. Of course if you are lucky to find a tenant who stays for a few years you wont incur this cost every year. 

    Same with repairs at 5% is 72.5. 

    CapEx is large ticket items that happen less frequently. Like having to replace the roof, boiler, new appliances, etc. See : How to Estimate Future CapEx Expenses on a Rental Property

    0Reply
  • Julius King
    New York City, NY · Member since 2016 · 48 posts · 12 votes
    10y

    vacancy, repairs, and cap ex are a must when analyzing a deal. If you leave any of this things out. You could end up with a gator!! 

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