Rental Property Investment Breakdown
Here is some overdue financial record keeping from our latest rental investment in August 2011. This breaks down all our out of pocket costs to purchase the property and get the 1st tenant in place.
|Out of Pocket Investment in Rental Property|
|Earnest Money||$ 1,000.00|
|Due Diligence To Seller||$ 75.00|
|Inspection Fee||$ 500.00|
|Pest Inspection||$ 75.00|
|HVAC Inspection||$ 110.00|
|Cash Needed at Closing||$40,239.13|
|Appliances (W/D, Fridge)||$ 1,570.94|
|Rental Advertising||$ 59.95|
|Supplies (light bulbs, batteries, keys)||$ 39.06|
|Total Initial Investment||$44,569.08|
The property was ready to rent when we bought it. We negotiated for a couple minor updates to the property to make it more rent-able with the sellers which helped reduce our time to value (the time it took to turn it into a cash flow positive investment). The main things we needed to do after close was install a washer/dryer, fridge, and a small punch list of minor updates/repairs that our handyman took care for $900.
We rented the place for $1,205/month which produces up to $213.92/mo after the mortgage payment (PITI). For planning purposes I reserve $100/mo for maintenance and repairs which yeilds us approx. $113.92/mo in free cash flow. I'll spell out the investment return a bit better in a future post, but as is you can tell it not something particularly exciting at least yet.
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