Thank 如山 for his professional discussion. I feel that I benefit a lot from his experience and insights. I am a new and an amateur real estate investor and do not know much in this field.
To Lovegoodmusic, the $600+ mortgage payment is included in $1,930 rental income, not $2.6K. You seem curious about the rental price in Boston. When I applied for mortgage for this townhouse in 2009, the lender’s appraisal covered both house value and the rental income because this is an investment mortgage. The appraisal gave a $2,000 to this 5-bedroom townhouse as rental income. Now it should be higher. I then charged $1,900 and later increased to $1,930 to partly cover the tax increase. I always ask for lower rent to attract and keep good tenants because rental is my investment vehicle rather than my “rice bowel” and I do not want to spend much time and energy on it.
Brian: 40+% return is based on the tenant payment of $1930 (to your) + her payment of 684.45 to mortgage for you? If so, the rent alone would be $2,614.45 in Boston?
LaoWong 发表评论于
Make sense. Another way to look at the real estate investment is risk vs. return. Properties in coastal cities appreciate fast but also bear more risk: for example the crash in CA. Properties in TX for instance did not depreciate that much. Timing is important in real estate cycle (usually longer than ten years).
Brian 发表评论于
Here is one example. Income/expenses are monthly.
Purchase price: $170,000 with $42,500 down payment.
Gross rental income: $1,930 (tenant pays water, electricity and gas from her pocket).
Please note, I consider the mortgage payment of $684.45 as investment return because the tenant pays it for me and I will get the house for free when the mortgage is paid off by the tenant (except for my down payment of $42,500). This way, my annual return is actually more than 40%.
I am going to buy the landlord insurance now which will put a dent into my profit margin.
Lovegoodmusic 发表评论于
Brian, can you provide an example of 20% to 38% return with mortgaes purchase?
Brian 发表评论于
如山
Since 2009, I bought 7 condos for rental in greater Boston area. For those bought with cash, the return is about 10% to 13%. For those bought with mortgages,the returns are 20% to 38%. And the values of all these properties have increased more than 30% since then. Even now, you still may be able to find properties in greater Boston area with the potential of 10% rental return if you buy them with mortgage.