Analyzing rental. Help please

[Anna Khan]

Experienced rental properties investors! Please help me to analyze correctly and Not make a big mistake. Calculator shows negative numbers. Not sure how. Thank you.

Condo price - 70K (paying cash)

HOA-$254

Annual Tax - $1,000

Location: Dallas, TX (Richardson ISD)

2bd/2b/2balconies

Updated, clean, community pool, parking, near college

Rent: $980-1,000

[Jerry W.]

@Anna Khan welcome to BP.  Real estate is local.  I am very far away from your market, so I can only tell you how your deal would be considered in my market.  First thing is to look at the covenants and restrictions and make sure they do not prohibit renting your unit out.  The second thing is that your taxes seem pretty low for Texas.  I would double check that.

If you were to have bought the property using financing, say 80% financed at 5% interest, say $56K. On a 30 year note your payments would be $300 per month. It would be $442 if you financed it for 15 years. When you add in your HOA fees you are at $554 per month for 30 year or about $700 per month. I will guess and say you will pay about $150 per month for taxes and insurance. I do 8% for vacancy, which would be about $80 per month. With a HOA your cap ex and repairs should be a LOT less than normal. Lets say $70 per month. I don't know where you live or how hands on you plan to be, but you may have to pay a management fee, lets say $100 per month. In my area this would be on the low end mostly because of the HOA fees. With a 30 year note it might be OK. It would help to have an idea of how new the property is, how much prices are going up etc. You can back off on needing cash flow if the market is going up rapidly. I hope this helps a little bit.