Should I purchase a rental property?

The answer should be based on the cash flow analysis. Is the analysis result positive or negative?

Let's look at one example.

• The property is a $240,000 single family home
  With 48,000 down payment (20%) , mortgage is $192,000 with 3.92% 30yr rate. The monthly payment is $908/month with $10896/year
• The closing cost is $5000. 
• The rent is $1800/month (0.75%) with annual rent $21,600/year
  Austin generally lease for somewhere between 0.5% to 0.8% of the market sales price per month. 
• HOA: $128/year
• Property tax $4,616/year (1.9%) 
  Property taxes average 2.4% to almost 3% of assessed market value.
• The property insurance takes $500/year ($42/month)
• Annual repairs: $1512/year
  Assume 7% of gross annual rent toward repairs and maintenance 
• Annual rent for vacancy and leasing cost: $2160/year (1.2 month/year)
  Assume 10% of gross annual rent toward vacancy/leasing
• ​Annual rent for property management: $1512/year (
  Assume 7% of gross annual rent toward management fees if you will be using a property manager.​

With these estimations, the cash flow is calculated as:

• (21600-10896-128-4616-500-1512-2160-1512) = $276/year

It's positive! If you consider the average 4.5% per year appreciation, you will also get $10,800 value increase in the house value.  Evaluate the purchase and make a plan. Then, you have a good basis to make your decision. 

Contact us or your agent to provide the detailed analysis. ​​