Thank you Brandon Pelfrey. I appreciate your advice sir. I was researching the basics of what to do when purchasing property and I wrote a list of things that would need to be taken in consideration. Can you give it a look over if you have the time? This is just a scenario that I brought up.
Home cost is $200000. Here is what must take into consideration.
1.Income:
Rental income=$2000
Laundry=0
Storage=0
Misc=0
Total monthly income:$2000
2.Expenses:
Tax:$150.00
Insurance:$100.00
Utilities: Electric, sewer, water, trash and gas:$0.00
HOA fees or Home Owner Association:$0.00( it will only cost nothing if the home is not located in a HOA area.)
Lawn care:$0.00
Vacancy:$100.00
Repairs:$100.00
Capital expenditures: $100.00
Property management:$200.00
Mortgage(only if you don't pay cash):$860.00
(Assumptions about mortgage:
Put down money for a down payment.
Get a $160000 mortgage with 5 percent interest in a 30 year span.)
Total monthly expenses:$1610.00
3.Cash flow:
Income:$2000.00
Minus expenses:$1610.00
Total monthly cash flow:$390.00
4.Cash on cash ROI or return on investment:
Down payment:$40000
Clothing cost:$3000
Repair money or rehab budget:$7000
Misc other:$0.00
Total investment:$50000
$390.00*12=$4680.00
Annual cash flow=4680
Total investment =50000
4860÷50000= 9.36 percent
Cash on cash ROI is equal to 9.36 percent.
