I keep going back and forth between treating 7.2% as a promising starting point and treating it as a distraction from the net cash flow. The property is a 4-bed new-build flat in Austin priced at $1,170,000, with projected rent of $7,039 per month.
On paper I have allowed for empty periods, management, ordinary upkeep, tenant changes and occasional substantial work. Insurance is still the least reliable input. Austin property tax and borrowing costs also need to be tested against less favourable figures, because a small change in either could absorb much of the apparent margin.
What local expense would you challenge first in this model? A rough comparison using realistic vacancy, insurance, tax and maintenance amounts would be more useful than the gross yield alone. I am especially interested in whether the property remains cash-flow positive after reserves and how that result changes under a higher financing rate.
On paper I have allowed for empty periods, management, ordinary upkeep, tenant changes and occasional substantial work. Insurance is still the least reliable input. Austin property tax and borrowing costs also need to be tested against less favourable figures, because a small change in either could absorb much of the apparent margin.
What local expense would you challenge first in this model? A rough comparison using realistic vacancy, insurance, tax and maintenance amounts would be more useful than the gross yield alone. I am especially interested in whether the property remains cash-flow positive after reserves and how that result changes under a higher financing rate.