Considering buying a Rental Property
I'm trying on drawing on the expertise here to get a handle what makes sense financially and what to watch out for.
The idea is to put the minimum amount down, I assume that is 5% of the purchase price, an essentially apply the rent revenues to pay for the mortgage and expenses plus hopefully have something left over at the end of the year.
First property I looked at as an example was:
Purchase Price: $379500.-
Expenses: $26160.- (includes mortgage, utilities, property tax, insurance, but NO maintenance)
Gross Revenue: $33204.-
When I look at the numbers, this seems a poor investment.
I remember reading that the rental income a lender considers for mortgage approval is half ofthe actual maximum income - that would be $1383.50 per month whereas the mortgage calculation comes to $1516.- per month.Is that typically correct?
I can easily make up the difference from my own income, but I don't really want to do that.
There is also no annual maintenance cost included in expenses - what would be a reasonable amount for a 4-plex with 10 year old furnaces and 5 year old windows.