I was generously gifted an out of town property just over a decade ago (2008) and have more recently become inspired and excited about learning how to use this property for wealth building. I've been on BP for a couple of weeks and reading everything I can here and in The Book on Rental Property Investing as well as videos on YouTube and the BP Podcast. My dream is to leverage this gift into financial independence through multiple income properties over the next 10-18 years before I retire. This is my first post and I could use some feedback to see if I'm pointed in the right direction, help me understand the numbers better as well as start to build my network and community in the real estate investing world.
The property is located in Portland OR and has doubled in value since 2008 but the cash flow is limited. I've been debating between three options and am open to considering anything that supports my long term goals;
1. Continue to hold and rent
2. Sell and 1030
3. ReFi/Cash Out to buy a second property (doesn't seem like the #'s support this)
I've been crunching the #s in a variety of ways to get experience and understand how the #s work and what they can tell me.
I could use feedback on the CAP rate and how to calculate the COC return. Since it was a gift I am not sure what to use as the basis - I refinanced in 2012 and have had some turn over costs when tenants have changed. I was floating the property for a bit but now I've raised the rent to get the property to cash flow, but the margins seem quite slim.
Ok, so here is what I've got so far.
| 2012 - ReFi | 2019 | 2020 |
| Value | $129,368.00 | $266,812.00 | $272,148.24 |
| Mortgage | $120,457.00 | $104,189.00 | $103,974.00 |
| Equity | $8,911.00 | $162,623.00 | $168,174.24 |
| | | |
| Annualized NOI | $10,020.00 | $14,100.00 | $15,540.00 |
| | | |
| Annual Mortgage Payment | $7,644.00 | $7,644.00 | $7,644.00 |
| | | |
| Cash Flow Before Taxes | $2,376.00 | $6,456.00 | $7,896.00 |
| | | |
| CAP | 7.75% | 5.28% | 5.71% |
| 2019 Monthly | 2019 Annually | Projected 2020 | Annually | Notes |
| Income | $ 1,175.00 | $ 11,750.00 | $ 1,295.00 | $ 15,540.00 | 2019 Income Jan - Oct, tenant left |
| Taxes | $ (233.50) | $ (2,802.00) | $ (233.50) | $ (2,802.00) | |
| Insurance | $ (46.25) | $ (555.00) | $ (46.25) | $ (555.00) | |
| Utilities | $ - | $ - | $ - | $ - | |
| HOA | $ - | $ - | $ - | $ - | |
| Vacancy 5% | $ (58.75) | $ (705.00) | $ (64.75) | $ (777.00) | |
| Repairs | $ (50.00) | $ (600.00) | $ (50.00) | $ (600.00) | |
| Cap Ex | $ (50.00) | $ (600.00) | $ (50.00) | $ (600.00) | Save for new roof, exterior paint, upgrade kitchen & potential addition |
| Prop. Mgmt | $ (80.00) | $ (960.00) | $ (80.00) | $ (960.00) | |
| Mortgage on loan | $ (637.00) | $ (7,644.00) | $ (637.00) | $ (7,644.00) | |
| Misc | $ - | $ (3,000.00) | $ - | $ - | Turn over costs since I didn't save for vacancy before |
| Total Expenses | $ (1,155.50) | $ (16,866.00) | $ (1,161.50) | $ (13,938.00) | |
| Cash Flow | $ 19.50 | $ (5,116.00) | $ 133.50 | $ 1,602.00 | |
Thanks in advance for any feedback!
