buying a duplex i was wondering if these numbers add up for cashflow?
At $97,500 purchase price...
minus 5% plus CMHC fee = $94,625.00
$94,625.00 @ 3.99% over 35 years = $418.41 / month
Taxes are $70.58 / month
Heat should be around $140.00 / month
Insurance should be approx. $50.00 / month
Income should be approx. $1000.00 / month
This would leave you at $678.99 expenses and $1000.00 income
or rent 2 bedroom at $600.00 / month and live in the 1 bedroom for
$78.99 / month
the house is in a pretty good area, but i wanted to live for free on one side, not pay 78.99 each month, what do you think?
- loanmasteroneLv 79 years agoBest Answer
Most investments do not realize a profit to begin with, however over a period of time this is possible.
Real estate investing is not a short time goal, but a long term systematical way of increasing wealth by using leverage property appreciation and tax advantages.
Your goal should be to break even or come as close to breaking even as you possibly can in your investing. You would be staying there.
You should be aware that this type property is eligible for a FHA or VA mortgage loan, thus you would not have to place a large down payment on your new home.
I did not see in your calculations the interest that would be deducted from your federal income tax each year. Based on this fact you could turn a profit or break even in your first year.
You should keep in mind and understand the fact that if anything can go wrong, it will go wrong. Your initial monthly rent income should go toward a fund to make any necessary repairs that will pop up on your rental that your tenant would certainly want repaired as soon as possible.
You would also need funds for any possible evictions that might take place.
You are now in business therefore must have enough funds on hand to protect your business. You might also want to join the local American Housing Association. This organization could be invaluable in assisting you in your new business with rental forms, eviction notices and the proper way to conduct an eviction in your state.The might also offer vanilla legal information about your new business.
If you are under the impression that all you would have to do is purchase a rental unit and they will come and you would not have any minor or major problems, it is time to wake up from your dream.
You have a very good idea, starting with a 2 unit, living in one while renting out the other. You could do the same with a 4 unit. In a couple of years you should duplicate this again. This will cause your net worth to increase.
Of course your responsibilities would also, but then on the other hand if you don't rick anything you normally don't gain very much.
I hope this has been of some benefit to you, good luck.
- LandlordLv 79 years ago
You are forgetting that you have to pay income tax on that 1000 a month, you don't just pocket it, that you can count on at least 1 months vaceny a year and that you have to maintain the properties, that all costs money.
- comericoLv 43 years ago
It would not be counted in case you like her there or no longer!! you're paying for an occupied domicile with a lease, you get no decision in the issue. you will desire to honor her lease! you won't be able to provider any variety of observe except she violates the lease! the present proprietor won't be able to get rid of her the two. She has a lease and you only would desire to cope with it. you will desire to have discovered if this became into available in the past to procure it! in case you do no longer want a tenant then do no longer purchase a house with somebody in a lease!! EDIT: in case you choose to purpose to purchase her out your value would desire to be comparable to hers if she had to interrupt the lease. Pay her what ever her lease wreck fee would be. If her lease would not state one then pay her 2 months lease on the grounds it relatively is a typical lease wreck fee.