NOTE: A lot of companies will advertise their properties as having “cash flow” this term is so relative. Let us share how we have come to the above cash flow number.
After your Principal & Interest Payment is paid, Your property taxes are paid, you property insurance policy is paid, and the property management company is paid Anything left over is your “Cash Flow”.
NOTE: This number is one of those numbers people have a tendency to complicate. Let us show you how we come up with this number.
"THIS IS JUST AN EXAMPLE OF HOW WE COMPUTE THE RETURN ON INVESTMENT".
Property Purchase Price:
$100,000
Property Rented for:
$850
Initial Investment (down payment):
$20,000
Figure out your expenses so you can come up with your monthly / annual cash flow on the property.
Principal and interest payment:
$400
Property tax’s:
$100
Insurance:
$35
Property management:
$90
Gross Monthly Income on Property / What it is already rented for:
$2700 / $20,000 = 13.5% (ROI) Return on Investment
To watch a brief video on understanding this type of ROI CLICK HERE
Instant Equity
Instant Equity : 9,800
NOTE: “Instant Equity” is a number that is based on the comparable sales in the neighborhood versus the purchase price.
This number is of course an approximate number and is based on the current market in the neighborhood this investment property is located. This is not an arbitrary number that we make up or a number we hope this property will be worth one day but it is an actual number that is based on actual homes sold in the actual area of the property in the most recent 6 months.
To watch a video discussing instant equity and property valuation practices CLICK HERE
Tenant Info
The tenant moved in to this property on 12/1/09 and at that time they signed a 12 month lease.
They were approved after an involved screening process.
About the Resident Renting your Property
They are fully responsible for paying their own:
Natural Gas Electric Water Cable Trash
Run the Numbers
Purchase Price:
87,200
Gross Rental Income:
850.00
* Principal & Interest Payment:
464.13 per month
Property Tax $ :
102.33 per month
Insurance:
35.00 per month
Property Management:
85.00 per month
Monthly CASH FLOW:
168.19
Annualized Return On Investment:
12 %
*How we figure out the prinicipal and interest number you see above is based on only 25% down, 7% APR, 30 Year fixed rate loan. We feel this is a very conservative view. The reality is when you talk with a lender they will be able to give you a much better idea of the kind of rates would be able to get based on your down payment, your credit, and the number of properties you already own. Right now lenders are only requiring 20% down and most of our clients are getting rates less then 7% on a weekly basis.
To hear an update as of this month on the lending criteria and any changes CLICK HERE
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Property Info
About Your Investment - House Info
Type : Single Family, Detached
Bedroom(s): Three
County : Mecklenburg
Garage : None
Basement : None
Year Built : 1996
Bath(s) : 2
Square Feet : 1021
No. of Floors : 1
Reserve Property Form
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Cash Flow
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Return on Investment
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Instant Equity
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Run the Numbers
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