Investment goals vary by investors. Some are looking for tax advantage. Some for rental income. Others for long term appreciation. Different purposes for real estate investment require different investing strategies. The properties chosen in this report currently available in the market demonstrate the result of different investing strategies. Please call Lucy Liou@925-819-0752, I can help you find the best option fitted in your need.
Property Address: 4340 WOLVERINE WAY, ANTIOCH CA
(This property is still available,please call Lucy Liou@925-819-0752 for more detail.)
Listing Price-$179,900
Previously Appraisal Value ( Feb 2006): $495,000
Property Description:
· Great "starter" or investment property.
· Easy commute to schools and shopping.
· Needs some work to be perfect.
· Built in 1995
· Two story
· 3 Bedrooms
· 2 1/2 Bathrooms
· 1418 sqft
Nice features : Open floor plan, High ceilings, Beautiful fireplace, 2-Car Garage, Granite counter, Nice size yard, and so much more.
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If you will purchase this property with $53,970 downpayment, then total loan amount is $125,930
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If your mortgage interest rate is 6.25% and closing cost and make-ready improvement is $6,799
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All passive losses can be used in your tax year
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you will keep your property for 10 year
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Manage your property yourselves
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If this property's annual appreciated rate is 2%
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If you can rent this property for $1200 per month and vacancy rate is 7.5%
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If monthly maintenance for this property is 20% of your rental income
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If your tax bracket is 30+-%
Well, let’s translate the cash flow worksheet in English:
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Your average pre-tax monthly operating cash flow is -$38 , and -$101 per month for 1st year
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Your average after-tax monthly operating cash flow is $78 , and $173 per month for 1st year
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The selling price after 10 years with annual appreciation rate 2% will be $216,169.
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Total amount invested in this property during these 10 years is $60,769.00.
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Total profit after selling this property before tax impact is $31,602
So is it a good investment? I do not know the answer, But You should know!!!!! You need to ask yourselves the following questions:
1. What is your purpose for this investment?
This investment makes sense to me if your investment purpose is Tax advantage or Long-term appreciation. But if your sole purpose of investment is rental Income, then you may want to consider putting more down payment or reducing the purchase price.
2. Can you afford the initial down payment and annual expense?
If not, this is not a investment for you. For the purpose of tax advantage, you may want to consider paying fewer down payments and having more annual expense for more tax deduction.
3. Can you do better in the stock market or anywhere else?
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
| Fair market value | $179,900 | $184,498 | $188,188 | $191,952 | $195,791 | $199,707 | $203,701 | $207,775 | $211,930 | $216,169 |
| Equity in property | $60,044 | $65,305 | $70,740 | $76,358 | $82,167 | $88,177 | $94,396 | $100,834 | $107,503 | $114,412 |
| Loan value | $125,930 | $124,454 | $122,883 | $121,212 | $119,433 | $117,539 | $115,524 | $113,379 | $111,096 | $108,666 |
| Ordinary income taxes avoided | $3,289 | $1,559 | $1,471 | $1,380 | $1,286 | $1,188 | $1,086 | $980 | $871 | $756 |
| Pre-tax cash-on-cash return | -2% | -2% | -1% | -1% | -1% | -1% | 0% | 0% | 0% | 1% |
| Post-tax cash-on-cash return | 3% | 1% | 1% | 1% | 1% | 1% | 1% | 2% | 2% | 2% |
| Income | ||||||||||
| Gross rent | $14,400 | $14,688 | $14,982 | $15,281 | $15,587 | $15,899 | $16,217 | $16,541 | $16,872 | $17,209 |
| Vacancy loss | $1,080 | $1,102 | $1,124 | $1,146 | $1,169 | $1,192 | $1,216 | $1,241 | $1,265 | $1,291 |
| Effective rent | $13,320 | $13,586 | $13,858 | $14,135 | $14,418 | $14,706 | $15,000 | $15,301 | $15,607 | $15,919 |
| Leaseback payment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total income | $13,320 | $13,586 | $13,858 | $14,135 | $14,418 | $14,706 | $15,000 | $15,301 | $15,607 | $15,919 |
| Expenses | ||||||||||
| HOA | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Insurance | $100 | $102 | $104 | $106 | $108 | $110 | $113 | $115 | $117 | $120 |
| PMI | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Property tax | $2,245 | $2,303 | $2,349 | $2,396 | $2,443 | $2,492 | $2,542 | $2,593 | $2,645 | $2,698 |
| Property management fee | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Marketing fee | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Utilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Maintenance/ reserve | $2,880 | $2,938 | $2,996 | $3,056 | $3,117 | $3,180 | $3,243 | $3,308 | $3,374 | $3,442 |
| Misc | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total expenses | $5,225 | $5,342 | $5,449 | $5,558 | $5,669 | $5,783 | $5,898 | $6,016 | $6,136 | $6,259 |
| Property net operating income (NOI) | $8,095 | $8,244 | $8,409 | $8,577 | $8,749 | $8,924 | $9,102 | $9,284 | $9,470 | $9,659 |
| Financing | ||||||||||
| Interest payment | $7,828 | $7,734 | $7,633 | $7,525 | $7,411 | $7,289 | $7,159 | $7,022 | $6,875 | $6,718 |
| Principal payment | $1,476 | $1,571 | $1,672 | $1,779 | $1,894 | $2,015 | $2,145 | $2,283 | $2,430 | $2,586 |
| Total financing payments | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 | $9,304 |
| Annual improvements | $5,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Pre-tax cash flow | ($1,210) | ($1,060) | ($895) | ($727) | ($556) | ($381) | ($202) | ($20) | $166 | $355 |
| Depreciation | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 | $5,233 |
| Operating income for taxes (NOI - interest - depreciation) | ($9,967) | ($4,723) | ($4,457) | ($4,181) | ($3,895) | ($3,599) | ($3,291) | ($2,971) | ($2,638) | ($2,292) |
| Income tax impact | $3,289 | $1,559 | $1,471 | $1,380 | $1,286 | $1,188 | $1,086 | $980 | $871 | $756 |
| After-tax operating cash flow | $2,080 | $498 | $576 | $653 | $730 | $807 | $884 | $960 | $1,036 | $1,112 |
| Pre-tax monthly operating cash flow | ($101) | ($88) | ($75) | ($61) | ($46) | ($32) | ($17) | ($2) | $14 | $30 |
| After-tax monthly operating cash flow | $173 | $42 | $48 | $54 | $61 | $67 | $74 | $80 | $86 | $93 |
| Total annual cash flow | ($2,920) | $498 | $576 | $653 | $730 | $807 | $884 | $960 | $1,036 | $1,112 |
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