These numbers are for
example only to Determine Gain/Loss of a hypothetical property sold
after 1 year of purchase date.
Example:
Purchased 1800 sq ft home for 145,000. Which is 80.56 sq ft
The market rate for
other 1800 sq ft homes in the subdivision was $80.00 a sq ft
You have a first
mortgage of 116,000 (30 year term, 6% interest rate) 695.48 payment
You have a second
mortgage for 29,000 (15 year term, 8% interest rate) 277.14 payment
Your taxes and
insurance are 312.00 a month for a total of 1,284.62 monthly payment
$1,284.62 X
12=15,415.44 (Principal, Interest, taxes, insurance for 12 months)
Expenses:
Closing costs when purchased
5500.00
No down payment because
you have a First and Second Mortgage
Other yearly
expenses:
Rekey locks when you
moved in
100.00
HOA
Dues
250.00
Fans
500.00
Sprinkler Supplies/Maint
50.00
Landscape Maint/Supplies
600.00
New
Carpet
2000.00
Paint/Labor
2000.00
Stain
Fence
200.00
Garage Door
Opener/Install
250.00
Total
$5,950.00
Need to sell house
quickly, List house for sale
Other houses in the
subdivision, with 1,800 sq ft are now selling for 150,000.
You list your house for
$150,000
Costs for selling
house
Realtor fee (6%) 3% to
buyers agent and 3% to your agent 9000.00
Closing costs when your
house sells about 3% of purchase price 4,500.00
Payoff of the two
mortgages:
144,750.00
Total amount of money
to sell house is
158,250.00
If your house sold for
$150,000 you would need to bring $8,250.00 to closing
If you priced the house
at $158,250.00. Your property would probably not sell for a long time
because other homes the same size is available at lower prices.
How much money would
you have to bring to closing, if you had purchased the home at $75.00 a
square foot instead of $80.56?
Based on 3%
Appreciation, if you had not sold for 2 years what would your costs be?
What are your total
costs of living in the house, for one year? Two years?
Could you rent this
property and make a positive cash flow each month?
The Gross Rent
Multiplier or GRM that appraisers use is 150 in this case.
Send some email; I
would like to hear from you.
THIS SIMPLE EXAMPLE
IS GIVEN TO YOU TO SHOW ONE OF THE MOST IMPORTANT REASONS FOR BUYING A
PROPERTY BELOW MARKET VALUE.
Please fill out the form below to learn more.
