garden.quiet
Property investor
I need to decide whether this is worth investigating further, and the trade-off is already clear: the rent looks respectable against the price, but the margin may disappear once the property is run as an actual rental.
It is a three-bedroom coastal home in Boston priced at $600,000, with expected rent of $3,795 a month. The gross calculation comes to about 7.6%. This is my first rental analysis, so I am more interested in sustainable cash flow than in making that percentage look attractive.
I have separate assumptions for empty periods, management, ordinary upkeep and tenant changes, plus money set aside for a significant future repair. The structure looks sound from the information available, although the building’s existing reserves still need closer examination. I am also rerunning the deal at different financing costs.
Which Boston expense would most often turn a deal like this from positive to negative: tax, insurance, maintenance or vacancy? Rather than choosing an arbitrary yield target, how much monthly surplus would you want after recurring expenses, debt costs and sensible reserves?
It is a three-bedroom coastal home in Boston priced at $600,000, with expected rent of $3,795 a month. The gross calculation comes to about 7.6%. This is my first rental analysis, so I am more interested in sustainable cash flow than in making that percentage look attractive.
I have separate assumptions for empty periods, management, ordinary upkeep and tenant changes, plus money set aside for a significant future repair. The structure looks sound from the information available, although the building’s existing reserves still need closer examination. I am also rerunning the deal at different financing costs.
Which Boston expense would most often turn a deal like this from positive to negative: tax, insurance, maintenance or vacancy? Rather than choosing an arbitrary yield target, how much monthly surplus would you want after recurring expenses, debt costs and sensible reserves?