While I’m in the process of purchasing a home for my son and his family to live in for an equity sharing agreement we’ve come up with I thought I would share the numbers with you so that you can have good awareness of what a quality Kansas rental houses looks like from a real estate investor’s perspective. So here we go..
The home is located in Olathe, Kansas in a decidedly non-rental neighborhood. It’s your standard split entry, raised ranch sort of house with 3 bedrooms, 2.5 baths and in very nice condition. Good school districts. Furnace and water heater updated within the last seven years, the roof has about 5-8 years of life left though it appears in good shape. There has been foundation work done in the past though it is hardly noticeable. Fenced yard, great deck, updated kitchen and tasteful carpet/paint throughout.
Price asked was $210,000 and I have it under contract at $200,780…that is with me waiving my 3.0% buyer’s agent commission. So for most income property buyers the price would be $207,000….on the market for less than a week.
I’m putting 25% down and buying .25% of the rate down to 4.625 which means my monthly payment will be $774.26/mo for P&I only. Throw in taxes of $223.92/mo and homeowner’s insurance of $80.92/mo and you end up with a monthly nut of $1,079.10/mo.
Now, to put this in perspective, the home is about 600 sq. ft. larger than the apartment they were living in at $1,105/mo. So right away, we’ve got a win going on for my son…and yet we are going to keep this strictly about being a Kansas City area landlord.
It is my belief I can rent this home out at $1,295-$1,325 all day long. So we use $1,300/mo.
Immediately, if self managed, revenues exceed PITI by about $2,400/yr. Then, there is the principal reduction. And lest we forget tax benefits and appreciation.
For a complete and more detailed analysis of this and other properties you may be interested in purchasing, reach out to me. I’m happy to help.