Hey everyone, I have a little over 40k in savings, currently 23 living with my parents. My plan is buying a 3 bedroom home, living in 1 room, and renting the 2 other rooms out. Only debt is student loans which are high 3% and low 4% (low enough to warrant investing elsewhere) and I contribute to retirement already.
Here are my financial thoughts on buying a home:
- Purchase $125,000 3 bedroom home w/20% down, so a $25,000 down payment + $5,000 closing costs
- Mortgage of $600, + taxes/insurance/etc. for $300 = $900/month cost. Mortgage will be building around $4,200 in equity every year
- Rent each room for $900/month (rent is high in my area this is actually the low end estimate). This will cover my $900 monthly cost, and will be a $900 profit from the second tenant, so $10,800 profit/year.
- I’ll figure $2,000 a year average in repairs. I work in construction management, so most repairs I can handle myself for cheap. $3,000 in utilities, services, and maintenance as well.
In summary:
- $25,000 down payment
- $5,000 closing costs/fees
-
= -$30,000 initial investment
-
+$4,200 in equity/year
-
+$10,800 in rent
-
-$5,000 repairs, utilities, services, and maintenance
-
= +$10,000 profit
Total: +$10,000 off a $30,000 investment, a 33% return. I figure renting an apartment for $900 would be -$10,800 so there’s a $20,800 delta here.
Is this a good investment, and the best investment that I can make now?
Edit: I don’t want to disclose my location, but yes, in my city there are 3bed 125k homes where you can rent rooms for $900/month. The homes aren’t beautiful, but they aren’t unlivable either. The cheapest room in a home for rent within a 15 mile radius is $850 for a room, with hundreds of rooms available at higher prices. I know how crazy it sounds though, but it’s the situation in this area right now. I think developers have taken advantage of the area, knowing it’s low income and people can’t afford down payments, so they get squeezed by high rents (you won’t find an apartment room for less than $1,000 here).
Submitted August 05, 2018 at 08:15AM by AgOll https://ift.tt/2MjLdxc
