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?

Bookmark and Share

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. Although, I live in Las Vegas, I have had interest in real estate in Idaho, Ohio, South Carolina, Rhode Island, Massachusetts and Nevada. Contact me today if you want to invest in Las Vegas. As your realtor, I will help you find outstanding investment properties here.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s