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Home > Archive > Real estate forum > December 2007 > Question about return calculations
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Question about return calculations
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| Hi-tech Investment & Financial Analyst 2007-12-20, 9:25 am |
| Investor-basis property return calculations
=============================
$100,000 price (say a 3-bedroom house in a suburb)
20% down = $20,000
===============
Monthly rent = $1,000x 12 = +$12,000
Annual maintenance at 2% = -$2,000
Annual property taxes at 3%= -$3,000
Mortgage at 7% investor rate on $80,000 = -$5,600
Canceling depreciation & recapture= +/- $0
=====================================
Net
$1,400
======================================
Percentage return = $1,400/$20,000 = 7% before taxes, excluding price
appreciation
Does this arithmetic seem sound? How about the rent & maintenance
assumptions? Any one?
Thanks,
Gerard
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| Dick Fox 2007-12-20, 5:25 pm |
| The numbers don't mean anything without a specific house in mind. Some areas
you can get $1000/mo on a $100k house, other areas not. Taxes are not 3%
everywhere, and $80K at 7% for 30 years is over $6300 per year. What about a
capital reserve for the next roof or furnace? What about a vacancy
allowance? Are you going to use a property manager? (If so there goes your
7%) 7% return is not much, considering the work involved.
This where your Realtor comes in. You need to set your goals, first. Then
decide on the ROI.
Dick Fox, Broker Associate
RealtyUSA
www.DickFox.com
"Hi-tech Investment & Financial Analyst" <followthegold_nospam@hotmail.com>
wrote in message news:gnraj.17515$Rf5.1565@newsfe13.phx...
> Investor-basis property return calculations
> =============================
>
> $100,000 price (say a 3-bedroom house in a suburb)
>
> 20% down = $20,000
> ===============
> Monthly rent = $1,000x 12 = +$12,000
> Annual maintenance at 2% = -$2,000
> Annual property taxes at 3%= -$3,000
> Mortgage at 7% investor rate on $80,000 = -$5,600
> Canceling depreciation & recapture= +/- $0
> =====================================
> Net $1,400
> ======================================
>
>
>
> Percentage return = $1,400/$20,000 = 7% before taxes, excluding price
> appreciation
>
> Does this arithmetic seem sound? How about the rent & maintenance
> assumptions? Any one?
>
> Thanks,
>
> Gerard
>
>
>
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