All Forum Posts by: Dan Piercy

Hey All

Appreciate your feedback, I think I am going to get my rental monthly rate validated incase I am being conservative but I am hearing your feedback.

It sounds like appreciation should not be assumed even if it initially seems conservative should I just be looking at cash flow + equity contribution for my estimated return?

The house is in a good School district which is why the tax is so high which is the main cost driver.

the other thing I was thinking is if I sell now while its our homestead there is no tax on any capital gains where as if I turn it to rental and sell down the line I am going to have tax exposure.

Any other thoughts I should be keeping in mind?

Thanks

Dan

Hi All,

I am looking for advice we are looking into investing some money into our first rental and at the same time are looking for a bigger house for ourselves.

With this in mind we are considering keeping our current house and making this our first rental possibly in the future if we wanted to downsize we could return as we really like the neighborhood.

Our objective is long term investment to supplement out 401k’s although likely along the way we will need a balance between cash generating property and appreciation driven.

So Financials

Original Purchase price $300K in 2014 (Estimated current value $330-340k)

Deposit 20%/$60k

Interest Rate 3.75%

There is $200k left on the mortgage

I am using a excel rental calculator and I am using the original purchase details without updating for the reduced mortgage or higher appraised value as that seems to complicate.

Assumptions:

Estimated Rent $2300 p/m (Based on zillow and comparables)

Vacancy Rate 10%

Property Taxes $8800

Insurance $1200

Maintenance/Repairs $2000

Utilities $600(This was to include mowing services)

Advertising $250

Annual Expense inflation assumed at 2%

Property appreciation assumed 3% (This might be conservative Ann arbor has been 4-5% for last 5 or so years)

The property calculator gives me -2% return on cash but 16% return on investment.

Based on this what advice would you give me or watch outs?

Thanks

Dan

Hi Fred

I was just reading through some of your recent posts regarding commercial financing and you already have several properties using residential finance.

I am just starting out I have been viewing some properties one of which we put an offer on. The current financing option in place was a conventional mortgage with 25% cash down it was flagged to be I should be careful not to wrap up so much cash if I can avoid it. I am looking at properties around the $90-120k mark.

Would you mind giving me some advise on what you did?

Thanks

Dan