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.
- 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
- 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.
- 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!