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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 13936  
Subject: Re: Las Vegas house Date: 12/28/2012 4:45 PM
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Hi Phmerc,

Initially, before I got to the bottom, I was going to encourage you not to become an absentee landlord (especially for a single unit.)

NOw.... you say you have the ability to finance it 100% @ 2.69%!?! OK, I definitely want to know how you are going to swing that....

But let's run the numbers assuming its true;
$237.61/month = $106,000, I/O credit line @ 2.69%
$40/month = $480 insurance
$79.16/mo = Taxes
$100/mo = maintenance
=======
$396.33 hard costs of carry

$100/mo = property management
$166.66/mo = 2 months annual vacancy cost contingency, spread over 12 months
$83.33/mo = typical 1-month's worth of rent fee for unit turnover & marketing
=======
=======
$647.32 all-in costs of overhead...
- $1,000 Gross monthly rent revenues
=======
$352.68 monthly pre-tax margin

THE NUMBERS look good...
*HOWEVER* there is still a LOT MORE to it than just the numbers.

I'm still not a fan of long-distance long-term landlording (the exception being vacation rentals.) There are so many nuanced things that can start small and quickly, silently, secretly eat away your equity & cashflow when disinterested 3rd party management is being used (and you don't personally have a property management experience background from which to manage the managers.)

*EVERY* market has local opportunities... would you be willing to begin your landlording career by doing the hard work of hunting out the desperado sellers in your own neighborhood to do this from?

Dave
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