Investment Properties Cash Flow?

8/22/19- Cash FlowI hope you are having a great day and I hope that life is treating you well.  Yesterday, my wife moved our baby into her dormitory at UNLV and it was barely 110 degrees.  Not so fast on the empty nest, as you will hear more and more about the young boys who are “living with us” in the weeks to come.  My kind of boys too!  Baseball players that love all sports!  Life is getting good!

On the business side of the ledger I am looking at investment properties and noticing that they are cash flowing again!  This is a great excuse to call your clients since the stock market extremely volatile and real estate is a good solid long term play.  So lets look at a couple of areas and see what we think:

Valencia Sunrise in decent to good shape – 1128 Sq foot – $515,000.00 – 25% down – all in payment  $2500.00 – Rent for $2650 – First year Principal pay down = $6600.00 – Total invested  -$135,000.00 – take $150 per month for expenses = 4.89% Return / Year 5 with 2.5% rent increases  – Rent $3000 – principal paydown  $7850.00 now profits are $13,850.00 – $2000.00 for expenses = $11,850 / $135,000.00 = 8.778% Return on investment.  Year 10 = rent 3401 / Principal paydown = 9641 = $16,500 profit 12.2% ROI – If values rise by just 3% annually in 10 years this $515,000.00 property will be worth  $695,000.00 – so that is $180,000.00 in profits that you could add back and show an additional 13.33% profit annually!

1700 Sq foot condo in Sherman Oaks  – $650,000.00 Price  – 25% down  – payment including HOA  = $3450.00 – rent for $3600.00 – First year Principal pay down = $8400.00 – Total invested  -$170,000.00 – take $100 per month for expenses = 5.29% Return / Year 5 with 2.5% rent increases  – Rent $4078 – principal paydown  $9904.00 now profits are $17,440.00 – $1500.00 for expenses = $15,940 / $170,000.00 = 9.376% Return on investment.  Year 10 = rent $4621 / Principal paydown = 12,168 = $25,000 profit 14.7% ROI – If values rise by just 3% annually in 10 years this $650,000.00 property will be worth  $877,000.00 – so that is $227,000.00 in profits that you could add back and show an additional 13.33% profit annually!

Oh, by the way, this is the way to make a lot of money in Real Estate!  You have to start by not buying a new car, boat, toy hauler…

Some interest rates have bounced back up a bit, but rates are moving daily or truly by the minute.  Below are rates as of this moment:

  • 30-year fixed conventional 1st Mortgage with 25% down – 3.625% (3.673 APR). Loan amounts up to $484,350.00 = $2208.88
  • 15-year fixed conventional 1st Mortgage with 25% – 3.125% (3.210 APR). Loan amounts up to $484,350.00 = $3374.03
  • 5/1 ARM 1st Mortgage –  25% down – Fixed for 5 years and then becomes variable – 3.125% – (3.144 APR) Loan amounts up to $3,000,000.00 = $12851.26
  • 7/1 ARM 1st Mortgage – 25% Fixed for 7 years and then becomes variable – 3.250% – (3.261 APR) Loan amounts up to $3,000,000.00 = $13,056.19
  • 10/1 ARM 1st Mortgage – 25% Fixed for 10 years and then becomes variable – 3.375% – (3.385 APR) Loan amounts up to $3,000.,000.00 = $13,262.89
  • 30-year fixed 1st Mortgage FHA loan 3.50% down – 3.250% (4.663 APR). Loan amounts up to $484,350.00 = $2144.81 + $349.08 PMI = $2493.89
  • 30-year fixed 1st Mortgage VA loan 0% – 3.250% (3.296 APR). Loan amounts up to $484,350.00 = $2107.92
  • 30 Year Fixed rate 1st Mortgage Jumbo Loan 25% down – 4.125% (4.145 APR).  loan amounts up to $3,000,000.00 =14,539.49

I will be in the office all day today and tomorrow and I will be in beautiful Las Vegas to put the finishing touches on Courtney’s dorm room, but I have my cell phone and I love taking calls!  Yeah, I may hit the tables a little, but nothing stupid as I am paying for 3 colleges!  Never thought I would say that!  My oldest is threatening law school, so we will see if we can get to 4 colleges before we get to two!   My cell is on all of the time at  661-714-6258.  Texts, calls, whatever!  Email is Mike@AugustaFinancial.com and office is  661-260-2970 xt. 2222.  My team is working this weekend so if you need anything, let me know and we will get it out ASAP! Have a great day and a better weekend!