rental investment cost is $240,000

[moneyismyservant]

I am thinking of purchasing a freehold townhouse, brand new with 7 year warrenty...all the bells and whistles in a neighbourhood that is re-establishing itself. Ocean View. (in the halifax area)

There are 2 other units reanting for $1400 and $1550.

I am purchasing for $260,000 and recieving $20,000 cash back.

I have 3 bedrooms on 2 levels and a bachelor basement suite.

my rental income should be $1300 for upper 3 bedrooms and the bach is $500.

Any input?

This is my first!!!!!

Thanks in advance to your response!

 

[Noel]

QUOTE (moneyismyservant @ Jun 4 2009, 09:07 AM) I am thinking of purchasing a freehold townhouse, brand new with 7 year warrenty...all the bells and whistles in a neighbourhood that is re-establishing itself. Ocean View. (in the halifax area)

There are 2 other units reanting for $1400 and $1550.

I am purchasing for $260,000 and recieving $20,000 cash back.

I have 3 bedrooms on 2 levels and a bachelor basement suite.

my rental income should be $1300 for upper 3 bedrooms and the bach is $500.

Any input?

This is my first!!!!!

Thanks in advance to your response!

Why is there a large difference in price between yours and the other two? Can it be supported?

 

[invst4profit]

In my opinion purchase price is too high based on expected rental income.

 

[JulieHoffman]

As long as it will cash flow. I think it looks pretty good. Based on what I know, you should be able to make this thing cash flow. Remember the tenants might not get along sometimes. Maybe try to get a family in there (an uncle in the basement). Sharing utilities can be challenging too. So maybe build the average cost of utilities into the rent. Add another $150 to the upper and $50 to the lower and advertise as utilities included.

Keep that $20,000 in a savings account and be REAL careful with it.

There are ways to pay your mortgage down quicker as well FYI

Best of Luck!

 

[invst4profit]

If utilities are included I would not advise investing it this property. There are plenty of multi units available with separate utilities that would be a better investment.

Why pay down the mortgage on a investment property? All that does is tie up cash and diminishes your tax deductibility.
If paying down a mortgage is necessary to provide positive cash flow the property is a bad investment.
The cash flow is not from the property it is from your cash. This is not the intent of investing in real estate. There are many other better places to invest cash with far fewer headaches.

 

[moneyismyservant]

QUOTE (invst4profit @ Jun 5 2009, 07:25 AM) If utilities are included I would not advise investing it this property. There are plenty of multi units available with separate utilities that would be a better investment.

Why pay down the mortgage on a investment property? All that does is tie up cash and diminishes your tax deductibility.
If paying down a mortgage is necessary to provide positive cash flow the property is a bad investment.
The cash flow is not from the property it is from your cash. This is not the intent of investing in real estate. There are many other better places to invest cash with far fewer headaches.


My strategy is to divide the unit so there is a bach suite so I have a little cash flow....when the mortgage term is up I am wanting to refinance 95% loan to value to invest in another property (rental) and or bonds/stocks, etc.

The intention is never to pay off the mortgage but to keep accessing the equity to invest in other areas.

Thanks for your input.