By signing into my site, you can access your favorites from any computer and get e-mail updates when new listings come in that match your recent searches.
June 13th, 2011 8:42 AM by David W. Welch
I have a few investors that I am working with who just love all the experts scaring would be buyers into waiting on the sidelines. One property that is currently under contract for $60,000 is a three bedroom, two and half bathroom townhome just south of the Orlando International Airport. It is also very convenient to the attractions area. When he closes, my investor will rent this 1,500 square foot townhome out for $950 per month. He owns several others in the area, and this is pretty much the market rent for one of these properties. What he does not want you to know is that if you were to buy this home instead of renting, you could save quite a bit of money.
If you don't believe me work the numbers yourself, but here they are. Current mortgage rates are about 4.5% for a 30 year fixed, but let's just round that up to 5% to be conservative. With an FHA loan putting the minimum down payment a buyer would end up financing almost the purchase price, so let's just use $60,000 as the principal amount of the loan. The principal and interest on $60,000 at 5% for 30 years is (drum roll please) $322.09. Of course, it is a townhome and they have monthly fees. This complex assesses $183 per month. As the owner you also have to pay property taxes. This unit's taxes without homestead exemption are $1,222 per year or about $102 per month. As the owner, you will also want to insure your investment and $900 per year or $75 per month is more than enough to cover your property. Add these up and you come up with about $683 per month for principal, interest, taxes, insurance and HOA fees. The best part is you own it, and your saving $267 per month compared to rent.
But you don't have the money for down payment. With FHA, your down payment would probably be less than putting first, last and deposit down to rent the place. By the way the monthly savings add up to $3,204 per year. If prices dropped another 10%, you would still make up for it by just living there for two years. There are closing costs too, but with a good offer, you could probably get the seller to pick those up for you. Another way of looking at it is renting this home will cost you about 40% more than buying it.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone