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Real Estate Purchase Analysis: Buy And Hold Property #4 – The Gambrel

Fourth investment property with gambrel roofI had my eye on this house for a while. It is a pre-1900 home with a gambrel style look. A full remodel took place between 2009 and 2011. The location is an area I’ve really been really expanding in, only about 16 blocks from my first duplex. There is a lot of redevelopment and other positive signs in this area. What is really attractive is that it is at the end of a really small court. So while definitely smack dab in an urban core, it feels almost private. There is a long time tenant in place with no plans to leave.

Real Estate Purchase Analysis

Purchase Date: March, 2014
Type: Single Family
Purchase Price: $41,700
Appraised Value: $48,000
Terms: Traditional bank financing: 30 years at 5.5% with a 20% down payment.
Out of Pocket Costs: $11,023

Income And Cash Flow

Equity At Closing: $14,640
Monthly Rent: $839 (plus $25 pet fee) – Home is rented and lease expires in December, 2014
Cap Rate: 11%
Estimated Monthly Cash Flow (Using 50% Rule): $242.59
Estimated Cash on Cash Return – Year 1: 20.90%

Expenses

Mortgage – Principal and Interest: $189.41
Property Tax: $46.75
Insurance: $42.58
Utilities: $119
Property Management: $79
Expense Fund – Repairs and Vacancies (Using 50% Rule): $144.67
Total Expenses: $621.41

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