You are planning to dip your toe into investing in real estate. Youve come across a property that you are considering purchasing. The property address is 1626 Spruce Street, Unit 2. It is located in the Rittenhouse Square area of Philadelphia. It is currently listed for $280,000. Check out the listing here. You are working with a real estate agent who advises you that you can probably get the property for $250,000 because it has been on the market for over 90 days and this time of the year is favorable for buyers. You estimate you will need to update the kitchen and bathroom to be able to charge top rent for the property. The renovation cost is estimated at $20,000. After you have upgraded the property, you plan to rent it out. Your real estate agent thinks you can get $1,900 per month after the renovation. If you purchase the property, you plan to finance it with a mortgage at 80% LTV for a term of 30 years. Your interest rate is 3.50%. You will pay cash for the renovation costs. Your closing costs are 2% of the acquisition price. The annual taxes on the property are $3,966 per year. The insurance will be $1,500 per year. The condo fees are $218 per month. You are in the 28% tax bracket. 1. Assuming you acquire the property for $250,000, what is your monthly PITI for this home before renovation?

2. You have lined up your contractor and estimate it will take you 6 months to complete the renovation and market the property for rent. What is your average monthly outflow to pay for the renovation and carry the property?