Happiness is plenty of cash flow!

I just flew back into Las Vegas, and boy are my arms tired! (OK, that was cheesy).  I was in Rhode Island closing on a small apartment building that I had bought at a foreclosure auction.  Are you thinking why Rhode Island?  The answer is simple.  Abundant cash flow.  As excited as I am about the future appreciation of real estate in Las Vegas, I am just as excited about the incredible cash flow of 3 family apartments in Providence and Cranston Rhode Island.  Now, I certainly don’t expect them to appreciate at near the rate  as Las Vegas, but check this out. The building I bought was $131,000 and needs a little over $5,000 worth of work. 

On the first floor, I have a tenant that has lived there for 10 years paying $850 per month. I have a tenant living on the second floor that has lived there for 14 years paying $850 per month.  And the third floor is vacant and needs most of that repair money, but has 1 more bedroom, so even though it is on the least desirable third floor, with the extra bedroom, we will get at least $750 for it. If we get a section 8 tenant (don’t cringe – section 8 can be wonderful if you screen carefully) we can get $975. So let’s add that up without the section 8 tenant.

$850 1st floor
$850 2nd floor
$750 3rd floor
—————–
$2450 per month gross rent.

The annual real estate taxes are going to be $2,376 ($198/mo) and the annual insurance is $2,977 ($248/mo)

If I had a mortgage for the entire investment of $137,000 (just for illustration), and I were paying a high interest rate (by today’s standards) of 7%, my Principal and Interest payment will be $911/mo

So my monthly budget for expenses is;

$245 Vacancy (figured at 10%)
$245 repairs/misc (typical)
$196 Prop Mgmt
$198 Taxes
$248 Insurance
$96 Water & Sewer
—————-
$1420

after I pay the mortgage, I still have $509 every month

Here is the beauty – this is worst case scenario. I have 2 tenants that have lived there for years, so they are not likely to be leave or not pay rent. The new tenant is likely to be section 8 which pays an additional $225 per month (most of there rent will be paid by the state) and I will likely have very little vacancy. 

Do you like that?

BTW – I closed with hard money because of the nature of the repairs, and am open to flipping this property. Are you interested?

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Author: The Jeff Howard Group powered by Keller Williams Realty Las Vegas

I moved to Las Vegas in 1993 and I have been investing in Real Estate since 2003. I believe in creating win-win scenarios whenever I buy or sell any real estate. I have owned over 50 properties in Idaho, Ohio, South Carolina, Rhode Island, Massachusetts and Nevada. Whether you're ready to invest in the Las Vegas valley, or if you want to buy or sell a home here, as your Realtor, I will help you make great decisions and add to your bottom line. Call me today to talk about your next real estate move. 702 SELL NOW (702-735-5669). To see what my past clients have said about my, be sure to visit http://www.JeffHoward.reviews

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