Question
Scenario..... 3 bedroom, 2 bathroom home with 2 car garage in a desirable neighborhood. Market says that comparable homes in good condition sell for $160,000.You
Scenario.....
3 bedroom, 2 bathroom home with 2 car garage in a desirable neighborhood.
Market says that comparable homes in good condition sell for $160,000.You have examined the home and believe that it will need extensive work to make the kitchen and bathrooms current.It needs a new roof and other typical work.That often includes cleaning, painting, and flooring.You estimate that you will spend 3 months and $45,000 on the house, doing some work yourself.Your investment goals for real estate are a minimum of 18% of sales price as profit.You will use a real estate agentthat charges 5% commission.Assume that this is your only closing cost.You will be using cash.
- What is the most that you should pay for the house?
- If you rent the house you would take out a loan at 5% for 20 years.You will borrow at 75% loan to market value.How much rent would you have to charge to break even each month to cover your mortgage payment plus $200 per month in expenses?
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