Buy Triplex---Your Net Income and Rate of Return

                                                        Buy Triplex----Your Net Profit

This is just a proforma profit, actual numbers may vary, it is case wise.  For exact figures Consult Lender.

Sale Price of Triplex    -------------------------------$ 200000     This is imaginary figure--Just for idea

Down Payment -------------------20%---------------$ 40000

Loan Amount-------------------------------------------$ 160000

Monthly Payment including PITI-------------------$ 1071 Rounded      ( This is rough figure calculated by Mortgage calculator---You must verify this with your lender )

                                                                                  ( This amount includes about $ 257  principal which will reduce your loan every month and will increase your equity by $ 257 every month )

Income  Per Month  Rough Estimate   Proforma                           Expenses Per Month  Proforma

Total Rent Collected----------------$ 2250 Per Month                       Monthly Payment--------         $ 1071

Vacancy Factor 5 %----------------$ 113                                           Water, sewer, Garbage-----    $ 140

                                                                                                       PG &E------------------------------$ 40

Gross rent----------------------------$ 2137                                          Landscaping----------------------$ 70

                                                                                                       Maintenance----------------------$ 150

                                                                                                                                                      --------------

                                                                                                       Total Expenses------------------$ 1471

Expected saving per month   Net                                                 $ 2137- 1471   =   $ 666

  Click Here to Calculate Rate of Return--This is a Spread Sheet-Fill your own numbers as per your potential rental, spread sheet will calculate numbers

Mortgage Calculator---Click here to calculate your monthly payment

Disclaimer-------All these expenses are rough ideas, they are imaginary, these expenses will vary, in every property, these will be different, this calculation on this web page is just an idea, buyer still has to do due diligence by checking actual -Income expense, profit loss, rent roles, actual repair bills provided by seller. 

Now on your investment of $ 40000  You are likely to put $ 659 in your pocket every month 

Remember $ 257 per month is going towards your principal every month ( You are paying Mortgage )

Basically you are getting $ 923  per month as your return on your investment of $  40000  

In a year you are likely to  get $ 923  x 12  = $ 11076   every year on your investment of $ 40000

Between 4-5 years you are likely to get back your initial investment of   $ 40000

Just keep managing the property and keep paying mortgage every month

• Cash-on-Cash Return- This number is how much return you are getting on the money you invest. If you pay all cash for a property, this number will be the same as the Cap Rate. If you are financing, this number is the most accurate way to see the actual return you are getting on your cash-in and the leverage. Here is the equation, and remember to include the mortgage payment since this one is totally focused on financing:

Net Annual Income / Total Cash Invested = Cash-on-Cash Return                                      

$ ( 11076  / $ 40000 ) x 100                            =    27.69  %        Cash on cash return--This is imaginary

Lets be further more conservative put all various factors in consideration, take  this to be only 15 %

After payments of bills this 15 % rate of return on your investment is considered a good investment.

Now think that after 4-5 years you want to sell your property, your property sells for more money, that extra money is also your profit and will increase your rate of return.

Every year the rent may be increased by 10% but your 30 year or 15 year mortgage may remain same.

The increase in yearly rent will increase rate of return.

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Disclaimer----This is just a proforma profit, actual numbers may vary, it is case wise.  For exact figures consult lender. Puneet Bhargava is not a lender or tax expert, all figures must be checked by your lender, Consult your accountant, CPA, tax preparer,  calculate your rate of return your self. 

For Free Home Valuation Click here

Puneet Bhargava, Broker Associate/ Realtor  Cell # 559-274-7025

DRE Lic # 01859500

Guarantee Real Estate Office DRE # 00859360  

1275 N Willow Av

Clovis, CA 93619 

(Willow and Nees)

Office Tel 559-322-6020

Fax # 800-344-5675

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