This is the first of three formulas for buying a rental property. In this version the rental is purchased with cash.
Here are the assumptions:
|Cash Purchase Rental Formula|
|Fixup and holding costs||13,000|
|Rent earned on the property||1,430|
|Monthly property taxes||150|
|Monthly property management||95|
|Total monthly expenses||430|
|Monthly net (rent minus expenses)||1,000|
Summary: If you can buy the property for $155,000, fix it up for $13,000, and get $1430 rent, you will net $1000.00 per month. (Remember, income taxes on the net are not computed in this formula).
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