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    Property Investor Condo

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    Needster
    This document summarizes the financial projections for a rental property purchase over 5 years. It includes projections for annual mortgage payments, taxes, maintenance costs, rental income, cash flow, returns and property value. The purchase price was $295,000 with a $20,000 down payment and 35-year amortizing mortgage at 4.25%. While the property generated negative cash flow in early years, it became cash flow positive in year 3 and the capitalization rate and property value increased each year. After 5 years, the property was sold for $319,996, resulting in no gain or loss compared to investing the down payment and mortgage principal payments at the opportunity cost rate.

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    Property Investor Condo

    Uploaded by

    Needster
    32 views1 page
    This document summarizes the financial projections for a rental property purchase over 5 years. It includes projections for annual mortgage payments, taxes, maintenance costs, rental income, cash flow, returns and property value. The purchase price was $295,000 with a $20,000 down payment and 35-year amortizing mortgage at 4.25%. While the property generated negative cash flow in early years, it became cash flow positive in year 3 and the capitalization rate and property value increased each year. After 5 years, the property was sold for $319,996, resulting in no gain or loss compared to investing the down payment and mortgage principal payments at the opportunity cost rate.

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    This document summarizes the financial projections for a rental property purchase over 5 years. It includes projections for annual mortgage payments, taxes, maintenance costs, rental income, cash flow, returns and property value. The purchase price was $295,000 with a $20,000 down payment and 35-year amortizing mortgage at 4.25%. While the property generated negative cash flow in early years, it became cash flow positive in year 3 and the capitalization rate and property value increased each year. After 5 years, the property was sold for $319,996, resulting in no gain or loss compared to investing the down payment and mortgage principal payments at the opportunity cost rate.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    32 views1 page

    Property Investor Condo

    Uploaded by

    Needster
    This document summarizes the financial projections for a rental property purchase over 5 years. It includes projections for annual mortgage payments, taxes, maintenance costs, rental income, cash flow, returns and property value. The purchase price was $295,000 with a $20,000 down payment and 35-year amortizing mortgage at 4.25%. While the property generated negative cash flow in early years, it became cash flow positive in year 3 and the capitalization rate and property value increased each year. After 5 years, the property was sold for $319,996, resulting in no gain or loss compared to investing the down payment and mortgage principal payments at the opportunity cost rate.

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    of 1

    Purchasing A Property For Rental Income

    Year 1 Year 2 Year 3 Year 4 Year 5


    Annual Mortgage Payments $15,725 $15,725 $15,725 $15,725 $15,725
    Annual Mortgage Principal $3,679 $3,837 $4,002 $4,174 $4,353
    Cumulative Mortgage Principal $3,679 $7,516 $11,518 $15,692 $20,045
    Annual Mortgage Interest $12,046 $11,888 $11,723 $11,551 $11,372
    Property Taxes $2,200 $2,288 $2,380 $2,475 $2,574
    Maintenance $2,400 $2,496 $2,596 $2,700 $2,808
    Annual Costs $16,646 $16,672 $16,698 $16,725 $16,753
    Annual Rental Income $15,600 $16,224 $16,873 $17,548 $18,250
    Yearly Income (Loss) ($1,046) ($448) $175 $823 $1,497
    Cumulative Income (Loss) ($1,046) ($1,493) ($1,318) ($495) $1,001
    Annual Opportunity Cost $1,085 $1,273 $1,469 $1,673 $1,886
    Cumulative Opportunity Cost $1,085 $2,359 $3,827 $5,500 $7,386

    Annual Cash Flow ($4,725) ($4,285) ($3,827) ($3,351) ($2,856)


    Cash on Cash Return -4.4% -1.6% 0.6% 2.3% 3.7%
    Capitalization (Cap) Rate 3.6% 3.7% 3.9% 4.0% 4.2%

    Enter Parameters in Gray Boxes

    Purchase Price $295,000 Sale Price After 5 Years $319,996


    Legal Fees to Purchase $1,000 Legal Fees to Sell $800
    Property Transfer Tax (PTT) $3,900 Realtor Fees (6% on 100K, 3%) $12,600
    CMHC Insurance (if LTV > .80) $7,697 Net Sale Price (after fees) $306,596
    Adjusted Cost Base $307,597 Outstanding Mortgage Balance $267,553
    Down payment (must be < .95 LTV) $20,000 @ 0.95 LTV Proceeds to seller $39,043
    Mortgage amortization – Years 35 - Initial down payment $20,000
    Mortgage rate for 5 year term 4.25% - Equity (all principal payments) $20,045
    Initial Mortgage Balance $287,597 + Cumulative Income (Loss) $1,001
    Monthly Mortgage payment $1,310 Gain or (Loss) on Investment $0
    Initial monthly rental income (annual increases) $1,300 - Cumulative Opportunity Cost $7,386
    Annual Property Taxes $2,200 Gain or (Loss) compared to ($7,386)
    Annual maintenance or condo fees $2,400 investing down payment and
    Taxes, rent & maintenance increase per year 4.00% principal payments at opportunity
    Opportunity cost interest rate (annual) 5.00% cost rate
    Opportunity cost includes down payment & principal Prepared by Roger Need – July 2009

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