Hello,
These are made up figures. I just want to see if I am calculating this correctly. Any advice/opinions are welcome.
Thank you.
Asking $280,000 for property
Bought for 20% less = $56,000 ( $280,000 x 20% = $56,000 )
loan = $224,000 ( $280,000 - $56,000 = $224,000 )
30 years
7% interest
Loan Amount = $1490.27
Taxes = $400 per month
Insurance, Maintenance, Expenses = $600 per month
$1490.27 (Mortgage) + $400 (Taxes) + $600 (Insurance, Maintenance, Expenses) = $2490.27
4 units at $1,000/ unit = $4,000
$4,000 x 15% vacancy = $600
$600 - $4,000 = $3,400
$3,400 - $2,490.27 (total expenses) = $909.73 (net cash flow)
$909.73 x 12 months = $10,913.76 (net operating income)
$10,913.76 divided by $56,000 = 19% cash on cash
$10,913.76 (net operating income) divided by $280,000 (asking price) = %3.8 cap rate