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2 Flat finances

October 5th, 2017 at 07:45 am

All

I paid $65,000 for the 2 flat
$25,000 from seller financing, 5%, amort/24 months
$40,000 I borrowed from myself from another account

In addition I am estimating incurring approx $40k for fix up.

$40,000 fix up
$4,500 already paid off
$5,500 incurred and not paid on a 0% credit card
$10,000incurred and not paid on a 2.9% equity line
$20,000 NOT incurred yet but estimated to be needed (will go on line of credit)

***

My plan to pay off involves the following chart and assumptions.

1. defer my $3500+ rental real estate tax escrow until January so I can use that 'escrow money' towards debt. Restart the escrow in Jan at a higher amount
2. assuming $2k/month from rental
3. assuming $1600/month savings from me
4. I get paid $300 a month from my brother
5. $8k tax refund estimate from accountant
6. birthday/christmas money
7. the 3 units pay themselves off March 2018, use that $5k mortgage money towards debt

***

if I can make this payoff I will have paid off all fix up costs and will only owe $30k total on the 2 flat by June 2018

Assumptions ARE aggressive and assume no further big snafus. They do assume 40 hours per week. I have been pulling regularly $2k from the rentals after costs.

See chart
Please note: chart has me bringing rental real estate fund back up to $18k by year end too




3 Responses to “2 Flat finances”

  1. Amber Says:

    Not bad, looks like if all is well you'll be pretty good by mid-2018

  2. AnotherReader Says:

    This scenario assumes everything will continue at the current level indefinitely. That assumption has not always worked out well in the past. 2008 comes to mind as the most recent abrupt change.

    In your shoes, I would run a different scenario to see where you would be if things headed south. Sort of a "stress test" of your plan. I would assume a job loss at the end of 2017, continuing into mid-2018. Increase your vacancy and reduce or eliminate payments from others who might not be able to pay you if the economy tanked.

    Where would you be if your income were suddenly decreased dramatically? How long could you last without losing a property? How uncomfortable would you be?

    In my opinion, you are taking on too much risk and compensating by making rosy assumptions. You are into the new property so far now that you have to finish it. However, I would be looking for an exit strategy that did not depend on these rosy assumptions to protect me from loss.

  3. Rachael777 Says:

    Stress testing is an EXTREMELY good idea and I will that today. Work is very slow. extremely good idea.

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