DEALMAKING

Finding Deals On The MLS

by Marlene Green

Editor’s note: if you transacted a good deal that you would like to share with us, please email editor@mreia.com Please put “MREIA BUSINESS” in the Subject Heading.

Real Estate investing is not only about buying and selling to cash big checks today but also buying cash flowing assets for long-term hold with tax benefits that will eventually payoff or allow you to leverage into other deals.

 

The “Lovely and Talented” Fern C. Burr, CFRI Past President and Lifetime Member, was able to snag a 1300sf, 4/2, Short Sale rental property listed on the MLS for $54,900. Fern’s original purchase price was $53,600. After having it inspected by Ron from the Inspectagator, a CFRI Business Vendor Member, the property needed spot treatment for termites, rodent removal and a new cover on an outside electric panel.

 

In addition, the carport was closed in by the previous owner to make a fourth bedroom and second bathroom) without permits so she was able to renegotiate her purchase price down to $49,500. That’s almost $5,000 off for the permitting issue and the actual cost to cure will be about 1/2 of that.

 

Fern is using the services of CFRI Business Vendor Member, Mark Orman to get the proper permits in place.

So, with a purchase price of $49,500, plus closing costs of $2,228 (including a $1,395 short sale fee), plus $3,075

for repairs and to get the addition permitted, minus $1,485 real estate agent commission, Ferns’ total cash

investment was $53,318.

 

Fortunately, the current tenant was eager to stay in the property at $900 per month rent.

 

After taxes & insurance of $129, Fern’s net monthly revenue is $771, or $9,252 per year.

 

Her ROI is 18% ($9,252/$53,318) BEFORE Depreciation.

 

With a $10,000 lot value, the building value is $43,818. Depreciation expense on building ($43,818/27 yrs.) is $1623/year.

 

So, if in a 25% tax bracket that is an additional $406 per year, cash on cash gain

for Fern!

 

Fern is CFRI’s newest Education Provider Partner (EPP) Coach, a CFRI Business Vendor Member - Mortgage

Broker of Mortgage Professionals of Central Florida, and a Real Estate Broker. Fern is a long-time real estate

investor who loves real estate and looks forward to coaching interested members on building a solid real estate

investment business for the long term.

 

 

Reprinted Courtesy of the Central Florida Realty Investors. Visit www.CFRI.net                                                  From the March 2013 issue of the CFRI Newsletter.