Hi all,

I need your help with the numbers. Is this a good deal? I did a few online calculators and I came up with a good profit over time but I am not sure if it considers the length of the loan. Also the area is in transition meaning it could go either way; there is theft and break ins.

Home:

Lot: 0.34 acres

Single Family

Built in 1961

Cooling: Central

Price/sqft: $59

Tax: $973

Cost of the home:65,000

Loan amount $61,750 @ 4.5 % for 30 years

The home can rent for $850 - $995

Monthly payment of $438 (principal+ interest, estimated taxes (not sure if this includes the property taxes or loan taxes?) + insurance (escrow) + private mortgage insurance.

Thank you!

If the house is in good condition and if you are handy and you can make repairs yourself, there is some meat on the bone.

I'd do whatever you can to avoid PMI however.

If your cashflow breaks even on the first six years, you'll be up 10% from forced savings.

That's an additional $6,175 on a down payment of $3,250.

Your total equity after 6 years will be $6175 plus your down payment of $3,250 = $9,425. This is with the assumptions of $0.00 annual cashflow and 0% appreciation.

I think that's an annualized return of 48%.

($9,425 / $3,250) / 6 years.

This also does not include the benefits of holding debt against inflation.

Granted, it's better for a longterm hold since realtor fees will eat a portion on any sale, but the contribution to your net worth should not be ignored as it will only accumulate faster with more returns each year you hold the property.

In the end it all depends what your expenses will be and whether the neighborhood appreciates or depreciates in value over time.