All Forum Posts by: Clifton Monte

@Bud Gaffney why do you think I should buy it?

@Wale Lawal thanks for the link!

@JD Martin perfect synopsis! After her grandparents died 11 years ago, the house laid dormant and sold on tax auction a couple years ago, has been reno'd, and is now for sale. Nobody in her family wants the house but my wife saw a sentimental opportunity motivated by our serendipitous temporary move to Richmond in the next few months. I would only agree if the numbers looked right.

After finding how bad the numbers looked, I posted my projections here to get critiques from more experienced investors since I'm a bonafide noob - and here we are!

@Jerry Hill thanks. Like I replied to Sunil, it's my wife with the attachment, but I just wanted to share my predicament to see how much I could learn in the process.

@Troy Albers thanks. Feel free to check out my response to Sunil.

@Sunil Kurian thanks for the reply. It's more emotional on my wife's side. I'm pretty convinced it's a bad deal (that I will not be purchasing), but just wanted to get my feet analyzing a deal, collecting resources, filling in numbers, and getting feedback to see if any new conclusions can be drawn. It's a win-win learning experience for me that I can take to the next deal!

@Kevin C. I'm definitely interested in touching base!

@Bill Brandt ahhh income and cash flow are totally different things - duh lol. Wow, that's some tremendous depreciation, was your townhome was a rehab?. If you don't mind, how long did it take you to pay off your mortgage?

You're right, I'm using a lot of estimations. Honestly, I used the BP rent calculator, rules of thumb for variable expenses, and data from Rentometer.com, to get these numbers. I flat out created tax and insurance numbers in the absence of data. You think I should ditch the BP calculator?

@Theresa Harris the $1375 does not include property taxes. You're absolutely right about the emotional attachment, which is nowhere on the list of reasons to purchase an investment property. I found out that median rents in the area increased by 10% since 2018, but the average rate of annual increase over the past 3 years is 5%. I think I'd have to education myself on city planning in the area to justify an expectation of sharp rent increases. 

@Bill B. thanks for reviewing my numbers. From my understanding, the income paying down the debt is the $1375 deducted from the total rent ($1550), unless I missed something. After investing in some additional research tools, I found that I would be justified in charging $1700 in rent, and also that rent increases since 2018 average around 5%. Even with those adjustments, I'd still be taking a monthly loss of $450+ after the 1st year.

Thanks for mentioning depreciation - I've calculated it at around $8900/yr [($345k - $100k)/27.5]. I understand depreciation reduces my tax burden against any income generated from the property, but I won't have any income generated, so what's the bottom line practical application of depreciation for me in this scenario?