For all those investing…

[Peruthopaniemundhi]

For all those buying investment homes, could you please help me about what I am missing here. 
say for instance we are buying a town home (single car garage) for $360k. 
 

Home Value: $

Down payment: $ %

Loan amount: $

Interest rate: %

Loan Term: years

Start Date:  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

Property Tax: $/yr

PMI: %

Home Ins:$/yr

Monthly HOA:$

$2,459.40

monthly payment 

Down payment $90,000.

typically rent for these homes will be $1800 to $2000. Eyla chusina every month min. $700 negative cash flow and it could be more based off HOA, taxes, and maintenance cost. 

so if we do a math for 5 years of investing. 
negative cash flow + maintenance cost for every year is $9000. If interest rates decrease, rents increase, then average negative flow is ~$7500. Which is ~$38,000 loss for 5 years.

Now, if the $90k used in down payment is put in bank at 5.5% rate this year and if economy is on positive mode then it may decrease, on an average for 5 years we gain $25,000. 
 

After 5 years, if we decide to sell the investment property, it may be sold for $420k, 5% for realtor commission($21k), $6k is paid off towards principal, so the total profit here is $420k-$360k - $21k = $39k is profit if we subtract negative cash flow and maintenance then the net profit is

$1k

vs 

bank interest rate profit is $25k

additionally, we have to manage tenant and go through maintenance process.

if above is all true, why all the desi people are running behind investment homes. I am I missing something?

 

 

[phatposts]

calc wise spot on. negative cash flow tho kone house will be a good investement only if the house price increases way above market avg which happened in the last decade. otherwise putting in TBills, SP500 ala better. 

rents ki you need to get 1% of the house value as monthly rent for it to make sense. ee market lo 1.1 sounds right imo

[Hitman]

You are exactly correct. I’m in the same boat. Every time I see some listing I calculate the above and drop off submitting the offer. (For rental property) then provide same సోది to wife about Tbills. It’s only social pressure you are not qualified if you don’t have a rental property.

if prices come down 50k from current levels,  I would buy with the hope of price appreciation after interest rates come down.

 

[Peruthopaniemundhi]

7 minutes ago, Hitman said:

You are exactly correct. I’m in the same boat. Every time I see some listing I calculate the above and drop off submitting the offer. (For rental property) then provide same సోది to wife about Tbills. It’s only social pressure you are not qualified if you don’t have a rental property.

if prices come down 50k from current levels,  I would buy with the hope of price appreciation after interest rates come down.

 

Thanks bro. Friends 2 rental homes konnadu from last 1 year. Typical Indian mindset is he has 3 properties vs we got 1. I tried to explain friends that his net profit is negative or very less compared to cash in savings account. But friends and including wife are not convinced with my calculation and looks at me as looser.. enni sarlu maths cheysina it’s a bad investment ani prove avuthundhi.. but I am not able to convince others so andukae asking what am I missing ani..

[Sixers]

Bhayya adhantha Black money ni white money ga chese prakriya. Calculation lu profit lu paniki raavu.

[Peruthopaniemundhi]

29 minutes ago, phatposts said:

calc wise spot on. negative cash flow tho kone house will be a good investement only if the house price increases way above market avg which happened in the last decade. otherwise putting in TBills, SP500 ala better. 

rents ki you need to get 1% of the house value as monthly rent for it to make sense. ee market lo 1.1 sounds right imo

On the other hand a friend of mine has negative cash flow on paper but if we closely observe it’s positive net profit.

He did 15 year mortgage with 2.7 interest, paying $3400 as mortgage and rent is $2500. There is negative 900 cash flow 

but,

out of his $3400 mortgage $2000 goes to principal, which means he is making $1100 profit by adding it to principal. 
 

so the basic concept is it’s not the value of the house, but interest rate determines either we have a true net profit or loss.

[Peruthopaniemundhi]

4 minutes ago, Sixers said:

Bhayya adhantha Black money ni white money ga chese prakriya. Calculation lu profit lu paniki raavu.

Adi eyla, loan officer ki or if we pay cash there should enough documentation on how we received this money kadha.. eyla doing Mari ?

[argadorn]

9 minutes ago, Peruthopaniemundhi said:

Thanks bro. Friends 2 rental homes konnadu from last 1 year. Typical Indian mindset is he has 3 properties vs we got 1. I tried to explain friends that his net profit is negative or very less compared to cash in savings account. But friends and including wife are not convinced with my calculation and looks at me as looser.. enni sarlu maths cheysina it’s a bad investment ani prove avuthundhi.. but I am not able to convince others so andukae asking what am I missing ani..

Nuvu endhuku cheothunavu e Sodhi vinevadiki chepplai vinani vallaki cheppedhu

[pandu123b]

1 hour ago, Peruthopaniemundhi said:

For all those buying investment homes, could you please help me about what I am missing here. 
say for instance we are buying a town home (single car garage) for $360k. 
 

Home Value: $

Down payment: $ %

Loan amount: $

Interest rate: %

Loan Term: years

Start Date:  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

Property Tax: $/yr

PMI: %

Home Ins:$/yr

Monthly HOA:$

$2,459.40

monthly payment 

Down payment $90,000.

typically rent for these homes will be $1800 to $2000. Eyla chusina every month min. $700 negative cash flow and it could be more based off HOA, taxes, and maintenance cost. 

so if we do a math for 5 years of investing. 
negative cash flow + maintenance cost for every year is $9000. If interest rates decrease, rents increase, then average negative flow is ~$7500. Which is ~$38,000 loss for 5 years.

Now, if the $90k used in down payment is put in bank at 5.5% rate this year and if economy is on positive mode then it may decrease, on an average for 5 years we gain $25,000. 
 

After 5 years, if we decide to sell the investment property, it may be sold for $420k, 5% for realtor commission($21k), $6k is paid off towards principal, so the total profit here is $420k-$360k - $21k = $39k is profit if we subtract negative cash flow and maintenance then the net profit is

$1k

vs 

bank interest rate profit is $25k

additionally, we have to manage tenant and go through maintenance process.

if above is all true, why all the desi people are running behind investment homes. I am I missing something?

 

 

bro just do it and then think

thst is this generation funda 😀

[FrustratedVuncle]

1 hour ago, Peruthopaniemundhi said:

For all those buying investment homes, could you please help me about what I am missing here. 
say for instance we are buying a town home (single car garage) for $360k. 
 

Home Value: $

Down payment: $ %

Loan amount: $

Interest rate: %

Loan Term: years

Start Date:  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

Property Tax: $/yr

PMI: %

Home Ins:$/yr

Monthly HOA:$

$2,459.40

monthly payment 

Down payment $90,000.

typically rent for these homes will be $1800 to $2000. Eyla chusina every month min. $700 negative cash flow and it could be more based off HOA, taxes, and maintenance cost. 

so if we do a math for 5 years of investing. 
negative cash flow + maintenance cost for every year is $9000. If interest rates decrease, rents increase, then average negative flow is ~$7500. Which is ~$38,000 loss for 5 years.

Now, if the $90k used in down payment is put in bank at 5.5% rate this year and if economy is on positive mode then it may decrease, on an average for 5 years we gain $25,000. 
 

After 5 years, if we decide to sell the investment property, it may be sold for $420k, 5% for realtor commission($21k), $6k is paid off towards principal, so the total profit here is $420k-$360k - $21k = $39k is profit if we subtract negative cash flow and maintenance then the net profit is

$1k

vs 

bank interest rate profit is $25k

additionally, we have to manage tenant and go through maintenance process.

if above is all true, why all the desi people are running behind investment homes. I am I missing something?

 

 

2k rent vastunna house 360k petti konadam is worst investment at > 7% interest rates. 

So find the right deal

[pakeer_saab]

1 hour ago, Peruthopaniemundhi said:

For all those buying investment homes, could you please help me about what I am missing here. 
say for instance we are buying a town home (single car garage) for $360k. 
 

Home Value: $

Down payment: $ %

Loan amount: $

Interest rate: %

Loan Term: years

Start Date:  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

Property Tax: $/yr

PMI: %

Home Ins:$/yr

Monthly HOA:$

$2,459.40

monthly payment 

Down payment $90,000.

typically rent for these homes will be $1800 to $2000. Eyla chusina every month min. $700 negative cash flow and it could be more based off HOA, taxes, and maintenance cost. 

so if we do a math for 5 years of investing. 
negative cash flow + maintenance cost for every year is $9000. If interest rates decrease, rents increase, then average negative flow is ~$7500. Which is ~$38,000 loss for 5 years.

Now, if the $90k used in down payment is put in bank at 5.5% rate this year and if economy is on positive mode then it may decrease, on an average for 5 years we gain $25,000. 
 

After 5 years, if we decide to sell the investment property, it may be sold for $420k, 5% for realtor commission($21k), $6k is paid off towards principal, so the total profit here is $420k-$360k - $21k = $39k is profit if we subtract negative cash flow and maintenance then the net profit is

$1k

vs 

bank interest rate profit is $25k

additionally, we have to manage tenant and go through maintenance process.

if above is all true, why all the desi people are running behind investment homes. I am I missing something?

 

 

they think 360K home will be 750K home in 10 yrs

now do the math again and see why our telugu tejams are doing it

 

[pakeer_saab]

31 minutes ago, Peruthopaniemundhi said:

Thanks bro. Friends 2 rental homes konnadu from last 1 year. Typical Indian mindset is he has 3 properties vs we got 1. I tried to explain friends that his net profit is negative or very less compared to cash in savings account. But friends and including wife are not convinced with my calculation and looks at me as looser.. enni sarlu maths cheysina it’s a bad investment ani prove avuthundhi.. but I am not able to convince others so andukae asking what am I missing ani..

math vachina vaadu asalu batakaledu, everything is against math these days

world is being run by mathless idiots

[pakeer_saab]

1 hour ago, Peruthopaniemundhi said:

For all those buying investment homes, could you please help me about what I am missing here. 
say for instance we are buying a town home (single car garage) for $360k. 
 

Home Value: $

Down payment: $ %

Loan amount: $

Interest rate: %

Loan Term: years

Start Date:  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

Property Tax: $/yr

PMI: %

Home Ins:$/yr

Monthly HOA:$

$2,459.40

monthly payment 

Down payment $90,000.

typically rent for these homes will be $1800 to $2000. Eyla chusina every month min. $700 negative cash flow and it could be more based off HOA, taxes, and maintenance cost. 

so if we do a math for 5 years of investing. 
negative cash flow + maintenance cost for every year is $9000. If interest rates decrease, rents increase, then average negative flow is ~$7500. Which is ~$38,000 loss for 5 years.

Now, if the $90k used in down payment is put in bank at 5.5% rate this year and if economy is on positive mode then it may decrease, on an average for 5 years we gain $25,000. 
 

After 5 years, if we decide to sell the investment property, it may be sold for $420k, 5% for realtor commission($21k), $6k is paid off towards principal, so the total profit here is $420k-$360k - $21k = $39k is profit if we subtract negative cash flow and maintenance then the net profit is

$1k

vs 

bank interest rate profit is $25k

additionally, we have to manage tenant and go through maintenance process.

if above is all true, why all the desi people are running behind investment homes. I am I missing something?

 

 

if you manage to add depreciation to the calculation that comes from tax purposes, it will turn positive but still shot of 25K  from interest for sure

[Vaaaampire]

If a property appraises just by 20% in 5 yrs, then its bad investment.

 

on avge 5 years lo 40-50% appraise ayye places loney invest cheyyali

[Hitman]

31 minutes ago, Peruthopaniemundhi said:

On the other hand a friend of mine has negative cash flow on paper but if we closely observe it’s positive net profit.

He did 15 year mortgage with 2.7 interest, paying $3400 as mortgage and rent is $2500. There is negative 900 cash flow 

but,

out of his $3400 mortgage $2000 goes to principal, which means he is making $1100 profit by adding it to principal. 
 

so the basic concept is it’s not the value of the house, but interest rate determines either we have a true net profit or loss.

Let’s calculate if you are buying with all cash. For a 450k townhome you get 3000 monthly. After deducting taxes+insurance + repair maintenance +HoA (without considering occupancy rate) - you barely make 1600 per month. 20k year. If you buy TBills 24000 . But with Tbills you pay taxes. With rental income you might pay less taxes with good CPA help