Are My Numbers Right?

[Marc Possoff]

Hi our house in Grays Ferry is almost done. It was completely gutted brick to brick. The only thing we didn’t do was dig out the basement. We don’t owe anything on the house. What we owe is the cost of the complete gut and ‘rebuild’ of $60k. The house is built on a 14x45 lot 2 stories. We didn’t go 3 stories with a set back. House has 2 nice size bedrooms with a large bathroom. We pretty much kept the house in the original layout without any additions to sq ft. Our intentions is not to sell it get rental income and possibly move into the house years down the road. 

I’m estimating we can get $1200 a month rent. Taxes are currently at $1300 / year and insurance is about $1000 a year. 

Since the house is VERY well done from top to bottom side to side there shouldn’t be much maintenance. 

I’m estimating...

$1200 rent -10%(CAPEX misc)= $1080 gross. The 10% includes maintenance account and possible months without rental income.

$475 loan + $117 taxes/ mo + $83 insurance / mo= $675

$1080 gross rent - $675= $405 net income 

I would use the $405 income to pay down the loan. Looks like it can be paid off in 6 years. Plus I might be able to throw maybe $200 extra a month which loan would be paid off in    5 years. 

Then when this house is paid off I would use the equity to build on a vacant lot we own about 2 blocks away in Grays Ferry  

Are my numbers right? Thanks!