Hi BP,
Real estate and BP newbie here. I have a house in La Porte, TX (inherited) that I am trying to figure out what to do. I ran the numbers using the BP buy and hold calculator and the numbers are not pretty (showing a negative cash on cash return), but there is a decent chunk of equity in the house. Here is some basic information:
-1600 sqft, 4 bed, 2 bath on 10K SF lot.
-House built in 1950, partially renovated in 2015.
-Needs a new roof, foundation work, and new windows.
Had a couple of area realtors come and give an appraisal of the house and they think it should list for $154,900. The remaining balance on the house note is around $117,000 @ 3.75% (30 year) with about 27 years remaining. For rental I have received a range of $1,450 - $1,600. Assuming $1,500 rental income per month below are my monthly expenses:
-Principal, Interest & PMI: $618.82
-Property Tax: $289.14
-Insurance: $208.33 (can probably be reduced by shopping around)
-Water / Sewer / Gas: $45
-Electricity: $40
-Lawn Care: $70 / month (summer); $35 / month (winter)
-Vacancy: 5% of $1,500= $75
-Repairs: 5% of $1,500 = $75
-CapEx: 7% of $1,500 = $105
TOTAL EXPENSES = $1,523.29.
As you can see the expenses are higher than the expected rental of $1,500. I can probably get the insurance lower by $50/month, but the property would barely cash flow. Should I sell and get the equity out and look elsewhere to invest? or should I try lowering expenses, spend on CapEX and see if I can get some positive cashflow?
Any suggestions or guidance would be greatly appreciated. If you need additional details please let me know.
Thanks in advance for your help!
Regards,
Shakeb
