Author Topic: Short Term Pain For Long Term Gain  (Read 1005 times)

mastrr

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Short Term Pain For Long Term Gain
« on: August 23, 2015, 11:09:02 AM »
Hello fellow mustachians.  I currently have one rental property and am looking to acquire another  I currently rent my primary residence.  My goal is to acquire a primary residence with a low down-payment of 3.5-5% to live in with plans to move out and rent it after a year.  My rent is currently is $950 and my fixed costs with factoring in costs for the property I am evaluating would be $1,100 per month.  So my opportunity cost is $1,800 a year.

Property: 3 bedroom, 1.5 bathroom home in a high end area with great schools for $145,000.  Rent for similar homes in same area is $1,600 but I am factoring in $1,550 because I like to be on the safe side.

So I am raising my living expenses for 1 year to acquire a rental property for cheap.  When I rent it out my cash on cash return would be 18% and generate an income of $240/month (after fixed, variable, vacancy, & maintenance expenses)

I am aware of other strategies like rent the rooms & use the same method with a duplex etc.  However, my market is tough and have researched it extensively.  Renting rooms is an option but would rather not live with a stranger.

What does the mustachian community think of this as it is raising living expenses?
« Last Edit: August 23, 2015, 11:10:38 AM by mastrr »