461 5 80th Street NE Marysville, WA 98270 Purchase Price $1,100,000
Analyze the potential return on a multi-family residential real estate purchase, rental and eventual sale.
List and briefly explain the documents that are needed to:
Make an offer
Apply for Financing
Complete Financing
Assuming that you make a 30% down payment, and finance the remaining 70% of the purchase price at an interest rate of 4.5% for a 30 year loan, what will the amount of the monthly principal and interest be
What other costs will you have in acquiring the property
How are financing requirements for a rental property different from buying a primary residence
What documents will you need to rent to tenants
Are there any licensing requirements
If so, what are they
How will you know how much to charge for rent
How are you going to market your property (find new, desirable tenants)
How can you protect yourself from bad tenants
How much will it cost to maintain the property over time
How did you determine this
What other expenses will you have
Assume that you are the new owner as of June 30, 2022 and you begin renting and have the units fully occupied starting July 1st, 2022. (That is, for the second half of the year.)
Given your assumed rental income and annual expenses, what will your cash flow be in 2022
Will this be different from the amount you report on IRS Schedule E Rental Income
Why
And by how much
Assume you sell the property at the end of 10 years, and over that time the market value of the property appreciated at a steady 5% annual rate. What will the selling price be
How much profit will you make
What expenses will you incur in selling it
What are the tax implications of the sale
What is your total dollar return on your investment
What will be the annual compounded growth rate of your investment
Show your calculations for both of these questions.