Boys, boys. Time to stop pulling at his underwear and provide a little bit of teaching. Everyone back in their seats, please. Playtime is over.

Some points on this, rcallstar24:

$228K financed for 30 years at 6.125% interest is $1385.35 a month. The interest only is $1163.75. You can also add about another $25-50 dollars on to that as the lender’s math does.

6.10 is the going rate for an OWNER occupied property, not investment. Assuming good credit, you should figure about a point higher (at least) for investment, which would be about $1535 a month or so.

$100/month for taxes AND insurance? Don’t know where you’re at, but that sounds VERY low for a $300K house.

What do you intend to pay yourself on the 20% downpayment of $57K, nothing? Using the same 7.10 interest rate and a 30 year term (and $60K loan amount), you get about $410/month.

Now, using your $100/month for T&I, you get $2045 expense to YOU minus $1700/month rent equals a negative $345/month.

That does NOT include deductions for vacany, repairs, maintenance, etc.

Thank you very much for the break down I was think that it didnt add up my self. WOuld you say Wholesaling would be a great place for a bebinner to start in the REI industry

I would say bird dogging is the best place to start. get with other, experienced investors and find deals for them. They tell you the type of deals they like, you go out and find them, and they pay your a finder’s fee ($500-1000 or so). This way you learn your local market and get some great, hands on education. You also see different approaches to doing things (fix and flip, landlording, houses, apartments, condos, etc) After you feel more comfortable, start working into wholesaling, or even do some deals yourself since you seem to have some cash to get you started.

Josh,
What Roger is saying is that there is an opportunity cost to using that $57K. This means rcallstar24 is using that money here as a down payment rather than investing in the stock market, a bond, etc. Therefore, he’s giving up a return on another investment to make this investment. So when you’re looking at the numbers on a deal, you don’t use just the amount for the mortgage payment only. You also need to include the down payment as well. The $410 per month is approximately what the payment would be for a loan for 30 years at 7.1% (it actually calculates out to $403.22, Roger was just rounding it a bit).
Think of it like this…
You wouldn’t buy a $1 Million dollar house by putting down $950,000, rent it for $500/month, and try to claim you had a “positive cashflow” deal. The payment on the $50,000 in this example would be $336.00 per month at 7.1% for 30 years.
That’s an extreme example, but the bottom line is that you need to include the total purchase price no matter how much you’re putting down. If you throw more money into a down payment to try and make the numbers work, you are NOT getting a good deal. In addition, realize like Roger said no vacancy, repairs, and maintenance are included in that estimate.
Do a search function at the top of the web page for the “50% rule.” It’s not a published rule the guys selling the infomercials have, but it’s the real world estimate of your expenses.