By Broker News People talk about running the numbers before buying an investment property but what are the numbers and how do you get accurate numbers? Running the wrong numbers can make the difference of making $500 or losing $1000 per month. In this bind we ordain go through the costs and factors to consider making your investments successful. RENTAL INCOME Rental income is not as straightforward as it seems. Sometimes properties are under-rented and sometimes properties are over-rented so be sure to find out the market rents when you believe a property. When we bought our first fourplex we looked at comparable leases and realized our rents were too high so instead of assuming we would continue to receive $3600 of rental income we had to be realistic and assume it was more desire $3200. MORTGAGE INTEREST A huge cost is mortgage interest. You should definitely choose out the details of your loan options and get an idea of current rates before running the numbers. It could alter or break a deal. If you are getting a duplex or a house the loans are generally similar to other home give programs. Triplexes and fourplexes tend to have higher rates and commercial is a whole other ballgame. One thing to believe is to put more down because the more you put down the less your loan will be which means less monthly interest to pay. Another consideration is the write of loan. We usually advise people to get a fixed rate mortgage these days because the current ARM (adjustable rate mortgage) rates are not all that much lower than fixed rates. Just get educated about the loan options and run the numbers with them. Oh and do not just take advice from one mortgage person. The best way to get educated is to talk to a variety of mortgage brokers and banks to sight your beat solution; not all loan places have the same programs. TAXES People frequently use the taxes from the year when they purchased the property assuming the taxes will stay the same. Taxes dress every year. Taxes can go up drastically after a purchase. For example an owner occupied property usually has tax breaks so unless you intend to owner occupy too your taxes will go up. In addition the county appraisal that your taxes are based on could go up after your acquire. For example if you buy a property for 100,000 but the tax appraisal last year was for 50,000 don't count on it remaining at 50,000. In fact. I undergo seen cases where a year after a property was purchased the tax assessor increased the appraisal value.
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