Long Term Investment Property Analysis

For those who don't wish to spend time at their property themselves, one of the best ways to be an active Real Estate investor is to on long-term rental property. With this type of property, you aren't tied to being in an area zoned for short-term rentals, so you can buy anywhere. These properties are usually leased for a year at a time and the tenant provides their own furniture, pays all utilities, and is responsible for lawn care.

The following property analysis shows an example of what you can expect to earn in one year from a 3 bedroom, 2 bath home, assuming a sales price of $150,000 with 30% down. This presentation is offered only as a guide and is not a guarantee, as situations will vary.

Rental income		$15,600
Expenses
Property Taxes	$2,400
Insurance	$800
Management Fees	$1,560
Homeowners Assoc. Dues	$250
Repairs & Maintenance	$1,300
Total Expenses		($5,760)
Net Profit before Mortgage Payment		$9,840

* Mortgage payment based on interest rate of 7% = $8,383
* Net cash flow after Mortgage = $1,457

Please note that approximately $1,000 of the mortgage payments for the year would be applied to the principle, which adds to your actual profit. In addition, by conservative estimates your property should appreciate in value by 5% per year.

Of course, you'll continue to see your return on investment grow the over time as more of your mortgage payment is applied to principle instead of interest, thereby increasing your equity.