SellingNorthernNV

I recently previewed a 3 bedroom 1.5 bath townhome listed for $27,810. Based on my preview, the property will need a minimum of new carpet/flooring and new paint throughout. I have an investor who recently purchased a similar unit for around the same price and is currently renting it out for $850/mo. I believe it may be possible to pick it up for around $23,000. After repairs, total price would be about $30,000. After HOA fees, taxes, and other expected expenses, this puts the net monthly income at around $500/mo or $6,000/yr. Based on a total of a $30,000 investment, the rate of return would be 20-22% annual return on investment if paying cash.

However, in the event you would like to leverage current interest rates and finance this type of purchase: using a conventional loan requiring 20% down ($4,600) plus up to $7,000 for repairs, your total investment would only be $11,600. Based on current interest rates of up to 5.5% for a 15 year mortgage, your monthly mortgage payment would be around $150/mo. This plus HOA fees, taxes, insurance, etc. would put your total monthly operating expense at around $525/mo. With a rent of $850/mo, net income would be $350/mo or $4,200/yr. Based on your total investment of $11,600, the Rate of return would be 34% annual return on your actual out of pocket investment.

Based on the last 6 months of sales data, the values of units in this development appear to have leveled off and are no longer depreciating. Economist expect to see another 1-2 year of this even value before starting to see an annual increase in value of 3-4% per year. After about 5 years from the purchase date, you could expect to cash out an additional $4,000 – $5,000 in equity. This would be in addition to the profits made from your rental income.

Disclosure: All figures are estimates based on current/recent data available.

Should you have any questions or need further information,
please don’t hesitate to contact me, (775) 220-1630
Or visit my website: www.SellingHomesinReno.com

Joshua Talayka
NAR designated: Short Sale & Foreclosure Resource
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521

Tags: CAP Rates, Chase International, financing, investment property, Mortgage rates, Nevada, NV, Real Estate, reno, Talayka, www.sellinghomesinreno.com, www.sellingnorthernnv.com

This entry was posted by Josh Talayka on Monday, April 25th, 2011 at 12:45 pm and is filed under Financing/Mortgage Topics, Investment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.