How Would You Run These Numbers?

[Marten M.]

I have what I imagine to be a pretty common scenario, but I'm having trouble wrapping my head around the proper way to run these numbers.

I just recently pulled equity out of my current house. I plan on using roughly $40,000 (20%) to renovate this house and the remaining $160,000 (80%) will be used to invest in other properties. The problem I'm having is when I run numbers on the current house I have, do I calculate the full amount of the P+I which is $910/mo. or do I only account for 20% of the P+I ($182/mo) as the remaining 80% will be invested in other properties?

If I calculate the full P+I, the house is negative cash flowing (which is somewhat okay because I currently live here, can raise rent for the second room and have a 3rd room that is empty I could rent out). If I calculate only 20% of the P+I, I pretty much break even - again, I still can increase cash flow by renting out the 3rd room so it's not the end of the world, but I'd like to know the proper way I should be doing this.

Hopefully this makes sense and I appreciate any insight you folks can give me.

Thanks!

[Guifre Mora]

Originally posted by @Marten M.:

I have what I imagine to be a pretty common scenario, but I'm having trouble wrapping my head around the proper way to run these numbers.

I just recently pulled equity out of my current house. I plan on using roughly $40,000 (20%) to renovate this house and the remaining $160,000 (80%) will be used to invest in other properties. The problem I'm having is when I run numbers on the current house I have, do I calculate the full amount of the P+I which is $910/mo. or do I only account for 20% of the P+I ($182/mo) as the remaining 80% will be invested in other properties?

If I calculate the full P+I, the house is negative cash flowing (which is somewhat okay because I currently live here, can raise rent for the second room and have a 3rd room that is empty I could rent out). If I calculate only 20% of the P+I, I pretty much break even - again, I still can increase cash flow by renting out the 3rd room so it's not the end of the world, but I'd like to know the proper way I should be doing this.

Hopefully this makes sense and I appreciate any insight you folks can give me.

Thanks!

 At this point, you are wasting your time calculating all this. Simplified it, live mortgage free have your rooms rented to cover the mortgage plus an extra for cashflow. When you purchase the new asset it's being paid for from your current tenants so the new asset will cash flow at a higher ratio.