Rental Property #1

Well this is it guys! I closed on my first official rental property! If you read my net worth posts, you know that I also rent out the two spare bedrooms in my primary home.

But this is it – officially número uno. Nummer eins. Nombre un.

Before closing, I was pretty calm – but now that the house is in my name I’m actually pretty nervous.

“What if I can’t rent it?”

“What if I have to move?”

“What if I do rent it and I have bad tenants?”

I’m hoping these are all normal concerns but that they will work themselves out.


Details:

  • Single Family: 3 bed/2 bath
  • Size: 1400 square feet
  • Year Built: 2010
  • Flooring: Tile(25%), Engineered Hardwood(35%), Carpet(40%)
  • Appliances Included: Stove, dishwasher
  • Granite countertops
  • Improvements: None

For those hardcore analyzers out there, no improvements means everything currently in the house is going on 7 years old. Roof, flooring, A/C unit. So clearly some of those costs will be rearing their ugly heads in the not-to-distant future.


Ok, ok. So that’s the boring stuff. What about the numbers? That’s what we’re all interested in right?

The Juicy Stuff:

  • Purchase Price: $133,000
  • Repairs/Upgrades: $0
  • Closing Costs: $2196.14
  • Closing Credits: $438.38
  • Acquisition Price: $135,196.14
  • Downpayment (20%): $26,600
  • Total Borrowed: $106,400

Expenses:

  • Variable: $66.67
    • Maintenance: $50
    • Termite Bond: $16.67
  • Fixed: $726
    • P&I: $563.08
    • Insurance: $93.81
    • Taxes: 69.11
  • Total Monthly: $792.67/mo and $9512/year

That leaves an operating overhead of $2,755.04/year.


Income:

  • Est. Monthly Rent: $1300
  • Est. Vacancy (10%): $130
  • Total: $1170/mo and $14,040/year

Cash Flow: $377.33/mo and $4528/year

Cap Rate: ($14,040 – $2,755.04)/$135196.14 = 8.34%

Wow, if I manage to meet my rent expectations and keep my expenses down this may actually pay off!

Once I get a tenant I’ll let you know how everything falls into place, in the meantime it looks like I have an additional yard to maintain!
For a much more enjoyable read check out Gwen’s post on her first rental property over at Fiery Millennial.

Curious how to calculate a cap rate? Read this post on Afford Anything.

Let me know if anyone has tips on finding tenants! I’m actually pretty stressed and I haven’t had the house for a week!

2 comments

  1. fierymillennials Reply

    I hear ya on the stressed out thing! Congratulations! I can’t wait to see how your rental plays out (esp in comparison to mine :D)

    • centsofk Post authorReply

      Sounds like you have the upper hand with tenants already in place!

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