In trying to determine whether benefits in investing in real estate I`ve tried to work out a few scenarios.
This is a real triplex advertized in my home town.
Asking price 134,900
General Description
TRIPLEX! EXTENSIVELY RENOVATED UNITS. MOSTLY UPDATED WINDOWS. MAIN FLOOR RENTS FOR $800/MO. SIDE 1 BEDROOM RENTS FOR $525/MO. LOWER REAR UNIT RENTS FOR $400/MO.
Total rent 1725.00 x 12 = $20700 gross
Subtract `SOME` EXPENSES:
WATER $945,
HYDRO $3200.41,
FIRE INSURANCE $1034,
HWT RENTAL $198,
RELIANCE COMFORT PROTECTION PLAN $230.40,
PROPERTY TAXES $1776.
UNION GAS EXPENSE $1684.
Total Expenses = 9067.40 NOTE this is only what is listed in the advertisement
20700
-9067
=11633 or divide by 12 = $969 per month
So let`s subtract 5% and that gives us $11051 total and $920.00 per month
11051/134,900=.08 or 8% CAP (if I did that right and there are no other expenses.)
In the same neighborhood a three bedroom townhouse rents for 850 -$150 in maintenance fees. There are townhouse as low as $60,000 but they are in the pretty bad locations. The nicer townhouses near the college go for about 110,000 with the odd one coming up under 100,000. Their maintenance fees are about $250, not bad if you can get 4 students in there for 12 months at $400 a piece, but from my recollections of college that`s a bit hard unless you`ve been at it a while.
As it stands I`m definitely thinking triplex, but worry there`ll be some big problem after 2 years that will wipe out all my gains.
Anyhow, I know there are some other beginners who are looking at a similar picture and the more experienced investors have probably been at this stage already so I`m interested to read your comments.
This is a real triplex advertized in my home town.
Asking price 134,900
General Description
TRIPLEX! EXTENSIVELY RENOVATED UNITS. MOSTLY UPDATED WINDOWS. MAIN FLOOR RENTS FOR $800/MO. SIDE 1 BEDROOM RENTS FOR $525/MO. LOWER REAR UNIT RENTS FOR $400/MO.
Total rent 1725.00 x 12 = $20700 gross
Subtract `SOME` EXPENSES:
WATER $945,
HYDRO $3200.41,
FIRE INSURANCE $1034,
HWT RENTAL $198,
RELIANCE COMFORT PROTECTION PLAN $230.40,
PROPERTY TAXES $1776.
UNION GAS EXPENSE $1684.
Total Expenses = 9067.40 NOTE this is only what is listed in the advertisement
20700
-9067
=11633 or divide by 12 = $969 per month
So let`s subtract 5% and that gives us $11051 total and $920.00 per month
11051/134,900=.08 or 8% CAP (if I did that right and there are no other expenses.)
In the same neighborhood a three bedroom townhouse rents for 850 -$150 in maintenance fees. There are townhouse as low as $60,000 but they are in the pretty bad locations. The nicer townhouses near the college go for about 110,000 with the odd one coming up under 100,000. Their maintenance fees are about $250, not bad if you can get 4 students in there for 12 months at $400 a piece, but from my recollections of college that`s a bit hard unless you`ve been at it a while.
As it stands I`m definitely thinking triplex, but worry there`ll be some big problem after 2 years that will wipe out all my gains.
Anyhow, I know there are some other beginners who are looking at a similar picture and the more experienced investors have probably been at this stage already so I`m interested to read your comments.
