I wanted to share this email I sent to an investor a few minutes ago. I am comparing the choice between a single family home purchase around $73,000 and the choice to buy 2 condos that together cost $73,000. Since we have not seen these homes, I don’t have repair and fix up calculated.
Here it is:
Well, I was looking at these and if you bought 2, not that you have to, but if so then total cost:
Total Cost $73K
Rent on the 1,100 sf unit is $725 to $750 so lets say for the 2 $1475
HOA is high but $186 * 2 = 372
Tax for both $2,020 or $84.17 per month
$1475 – 372 – 84.17 = $1018.83 or $12,226 per year
ROI on $73,000 is 16.75% not counting repairs fix up or vacancy
When comparing to a single family home that cost say $73,000
rents for $975 less taxes and insurance and HOA
$1000 + 600 + 480 = $2080 / 12 = $173.33
975-173.33=$801.67 per month and $9,620 per year
13.18% return not counting repairs, fix up and vacancy.
So, those condos don’t sound like a bad deal!
Now, think about this. What is the chance in the future the $73,000 house doubles to $156,000. Yes, I see that in 5-8 years.
But what about $36,000 condo going to $72,000? Yes, I see that as similarly possible. As a matter of fact, I see this as happening first.
Boy here is another way to look at it. I just put in the financial calculator payment = 725 – 186 – 42 = $497
$0 future value, 6% interest and 30 year mortgage.
So to have the same payment for a buyer as the lower rent.
What is the present value of that home?
This is with Zero down and 6% interest.
= $82,895.43
Not bad!!!!!
How to make money in the metro Phoenix real estate market by Jeff Cameron, Realtor.
MRW Homes.
480-502-7699
Jeff@TheCameronTeam.com
480-652-2004