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DIYLandLord

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Posts: 2
Reply with quote  #1 

I was planning to buy a condo in River North area in Chicago to live. However, I can rent it out and make pretty decent cash flow so I'm thinking about renting it out and rent another smaller condo to live. Here is the number:

Purchase price $320k with 20% down.

Monthly payment after everything (taxes, HOA,...) $2125

I can rent it out for about $2600 (based on historical rental data in the same building).

That is $475 cash flow a month or $5700 a year.

My closing cost is $71k

so I calculated my ROI at $5700/$71k * 100 = 8%.

That is a decent ROI not including someone else is paying for the equity of my condo.

Did I miss anything in my calculation? I didn't factor in vacancy or maintenance because that area of Chicago is very easy to rent out and not much to maintain for a condo in relatively new building.

What do you guys think?

NoNonsenseLandlord

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Posts: 178
Reply with quote  #2 
Did you count vacancy?  Repairs and maintenance?  management fees?

Even if you manage it yourself, you need to account for all of the fees.

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davisjone

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Posts: 28
Reply with quote  #3 
You cannot make a hypothetical calculation unless you find a renter. You don't know yet how much the renter will be willing to pay. 
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