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To: misterrob
Here is one I just ran:

Monthly Rental Amount $2,400.00
Percent of Year Unoccupied 5%
Annual Cash Flow (minus vacancy) of $27,360.00

Property Acquisition Cost $300,000.00
Less Down Payment - Cash In $60,000.00
Amount of the loan $240,000.00

Payment Monthly Principal/Interest $1,556.64
Annual Insurance Cost $1,200.00 (LOW BALL)
Annual Taxes $1,400.00 (LOW BALL)
Annual Repairs Budget $600.00 (LOW BALL)
Percent of Rent Mgmt Fee of 6%
These expenses total to Annual Cash Out of $23,521.28

Income of $27,360 minus cost of $23,521 = $3839 cash return over cash out

$3839 divided by cash investment of $60,000 = Rental Yield of 6.4%

This assumes some appreciation for the loss of the $60,000 down payment and that you have decent renters.

15 posted on 02/27/2008 1:35:59 PM PST by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: 2banana

I’m in your camp, that SFH homes do not cashflow.

But I might add, you’re also forgetting the foregone interest on the $60K down payment at whatever interest rate you’d like to use...roughly another $2K a year even at today’s poor rates.


17 posted on 02/27/2008 1:50:50 PM PST by Attention Surplus Disorder (We've checked, and all your zeroes are OK. We're still working on your ones.)
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To: 2banana

Rental housing is seldom profitable in itself. You can make money on it, but usually only in a rising real estate market.

I.e., let’s say you manage to break even for ten years, and then sell for double what you paid.

But that’s clearly not a good bet today.


19 posted on 02/27/2008 2:00:59 PM PST by Cicero (Marcus Tullius)
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To: 2banana

Big problems. 1) Never heard of a place that you could rent for 2,400 per month that would sell for only 300,000. 2) You don’t consider tax benefits.


32 posted on 02/27/2008 7:15:11 PM PST by ItisaReligionofPeace
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