Officially a Real Estate Investor!
A few years ago I decided I wanted to be a real estate investor and worked with my now wife to make that a reality. Our plan, which we've now executed, was to essentially save her entire salary and then use that to buy our home and turn my bachelor pad in to a rental property.
I was lucky enough to have bought my house at just about the bottom of the market and managed a refi last year with a crazy low interest rate. Since I've lived at this house for a number of years here's how I decided to breakdown the numbers:
Purchase price: $141,000 (amount at refi)
Down payment: $10,000 (cost of upgrades & maint required prior to renting)
Here are my Rental Numbers:
Rent: $1500/mo
Mortgage: $620
Taxes: $275
Vacancy: $115
Repairs & CapEx: $225
Insurance: $90
Given those numbers I cash flow over $160/mo which gives me a Cap Rate of 6.7%, a Gross Rent of 1.06% and a CoC return of just under 20%
Perhaps not the best deal ever on the site but still not bad for turning my primary home in to a rental.
I signed a lease w/ tenants this past week, they move in July 1 and we move out to our house which is being built currently.
Looking forward to spring boarding off this "deal" to the next one!