All Forum Posts by: Daniel A.

Ryan,

I agree. I really like the fact that its a new build. I believe this will serve to be more attractive to potential tenants and I will most likely not have to incur any maintenance reasons for hopefully several years.

To answer your question, the area is already pretty established, it does not have much room for improvement. The schools are rated at a 6.5-7/10. That being said, the purchase price is below $100 per square foot and I am betting the steady flow of increasing population to come to the Houston area as it has for the past several years. Also the home is what is referred to as a "patio home" to where it is actually detached from the other ones. Has like 5 ft of space between each home. Hopefully this will allow it to appreciate more than a "townhome"

The way I calculated the rent was with a  comparative market analysis so similar townhomes on the same street built last year with like 50 square foot more were leased for 1500. I can get 1550 if I am lucky.

Potential rental property. It is a new build townhome in Houston ~1700 square feet. The location (schools, restaurants, crime, etc) is decent but nothing too promising in terms of appreciation (3% annual average)

Here are the details:

Purchase price: $170,000

Rental Estimate per month: $1500-$1550

HOA: $1000/yr

Insurance: $1100/yr

Tax rate: ~3.4%

I assumed the following:

I use a 20% downpayment on a 30 year fixed conventional loan w/ 4% APR

New build so warranty is covering most things so minor, if any, maintenance will be needed

Take into account 1 month of vacancy per year

Take into account annual broker fee to list of one months rent

~5K closing costs

~2k in appliance purchases

Result: Assuming rent range of $1500-$1550/month and assuming 1 year I wont have to pay the broker fee to list:

From my cash flow analysis I am projecting to have positive cash flow of around .02%-2.1% per year.

I realize this is not a great initial cash flow. However, when I add back the principal and the tax benefit my net return is around 8.5%-10.6% per year.

Also, assuming the property appreciates 3% per year and is sold in 5 years, I calculated my IRR to be 15%.

Thoughts?

Hi, 

I wanted to get some opinions on a potential rental property. It is a new build townhome in Houston ~1700 square feet. The location (schools, restaurants, crime, etc) is decent but nothing too promising in terms of appreciation (3% annual average) 

Here are the details: 

Purchase price: $170,000

Rental Estimate per month: $1500

HOA: $1000/yr

Insurance: $1100/yr

Tax rate: ~3.4%

I assumed the following:

I use a 20% downpayment on a 30 year fixed conventional loan w/ 4% APR

New build so warranty is covering most things so minor, if any, maintenance will be needed

Take into account 1 month of vacancy per year

Take into account annual broker fee to list of one months rent

~5K closing costs

~2k in appliance purchases

Result: Assuming rent range of $1500-$1550/month and assuming 1 year I wont have to pay the broker fee to list:

From my cash flow analysis I am projecting to have positive cash flow of around .02%-2.1% per year. 

I realize this is not a great initial cash flow. However, when I add back the principal and the tax benefit my net return is around 8.5%-10.6% per year. 

Also, assuming the property appreciates 3% per year and is sold in 5 years, I calculated my IRR to be 15%.

Thoughts?