正文
A painter has painted the outside of the house(the wood panels, not the brick), it should look good now.
Found a property manager on Thursday, they went to see the house Friday. Here is part of the email she sent me:"Just a brief update to let you know we have been over & what we've found. We like the house!! The rental market is crazy busy right now. Can't wait to get this one finished up so we can start marketing it. It needs a little more work before we start letting people see it. I'm getting an estimate for the brickwork/damage to the wall.
The house should rent for $1300-$1350. "
The brickwork she mentioned is the brick wall of the garage: someone drive the car against the wall and damaged some bricks.She insisted the ceiling should be painted. It looks fine to me, but I decide to go with her.
If the rent is $1,300, then yearly rent is $15,600. Assume 5% vacancy, is $14,820.
Property management fee: $1,560
Property tax: $3,650
Insurance: $750
Repair: $1,560 (10% of rent)
========= ============
Total $7,520
Revenue left for mortgage: $7,300
--------------------------------------
Now the mortgage.I made an application for $117K, at 7.65%, for 15 years.I made a rough calculation, the monthly payment will be $1,102. The yearly $13,224. Negative cash flow is $5,924/year.
My problem: No credit history. So the banker charges me the highest rate. Also, it is my first purchase in US, I do not have the service of mutiple lenders/mortgage brokers. Also, I need to get my money out quickly for future purchases. Also, cashout mortgage seems to carry a high rate itself.
Why did the banker not give me a HELOC? I forgot to ask for the HELOC.
I am willing to pay a high rate, as long as I can get the money out. As my credit history establishes, I should be able to gradually reduce my rate.The total money I spend on the property to get it ready for rent will be $100K. If I get the $117K loan, I actually have $17K more cash in hand after everything is settled. But I have to pay about $500 into the mortgage every month, although $350 of that will be principal.
I am going to dispute the tax assessment value after everything is done: the current assessment value is $146,556, but I bought at $93,751. If the assessment value is reduced to the purchase price, then property tax will be lowered by ($146,556 - $93,751) X 2.5% = $1,320.Then the yearly negative cash flow will be: $5,924 - $1,320 = $4,604.
For the first year, $4,044 of the $4,604 will be principal.
For the second year, the pricipal will be $4,747, which is greater than $4,604.
If I could take out HELOC at prime rate, then there will be no negative cash flow. I look forward to that.
Found a property manager on Thursday, they went to see the house Friday. Here is part of the email she sent me:"Just a brief update to let you know we have been over & what we've found. We like the house!! The rental market is crazy busy right now. Can't wait to get this one finished up so we can start marketing it. It needs a little more work before we start letting people see it. I'm getting an estimate for the brickwork/damage to the wall.
The house should rent for $1300-$1350. "
The brickwork she mentioned is the brick wall of the garage: someone drive the car against the wall and damaged some bricks.She insisted the ceiling should be painted. It looks fine to me, but I decide to go with her.
If the rent is $1,300, then yearly rent is $15,600. Assume 5% vacancy, is $14,820.
Property management fee: $1,560
Property tax: $3,650
Insurance: $750
Repair: $1,560 (10% of rent)
========= ============
Total $7,520
Revenue left for mortgage: $7,300
--------------------------------------
Now the mortgage.I made an application for $117K, at 7.65%, for 15 years.I made a rough calculation, the monthly payment will be $1,102. The yearly $13,224. Negative cash flow is $5,924/year.
My problem: No credit history. So the banker charges me the highest rate. Also, it is my first purchase in US, I do not have the service of mutiple lenders/mortgage brokers. Also, I need to get my money out quickly for future purchases. Also, cashout mortgage seems to carry a high rate itself.
Why did the banker not give me a HELOC? I forgot to ask for the HELOC.
I am willing to pay a high rate, as long as I can get the money out. As my credit history establishes, I should be able to gradually reduce my rate.The total money I spend on the property to get it ready for rent will be $100K. If I get the $117K loan, I actually have $17K more cash in hand after everything is settled. But I have to pay about $500 into the mortgage every month, although $350 of that will be principal.
I am going to dispute the tax assessment value after everything is done: the current assessment value is $146,556, but I bought at $93,751. If the assessment value is reduced to the purchase price, then property tax will be lowered by ($146,556 - $93,751) X 2.5% = $1,320.Then the yearly negative cash flow will be: $5,924 - $1,320 = $4,604.
For the first year, $4,044 of the $4,604 will be principal.
For the second year, the pricipal will be $4,747, which is greater than $4,604.
If I could take out HELOC at prime rate, then there will be no negative cash flow. I look forward to that.
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