Crunching the numbers?

by Surdeep Dhaliwal
(Mississauga)

I am trying to get a better understanding of real estate investing and you guys provide tons of great information with a genuine sincerity (hard to find these days).
My question has to do with trying to grasp the concept of "crunching the numbers". Let's say you have targeted and acquired a house, you get a good deal below market value or right at market value. It's a single family home and your either thinking of using it as a straight rental property or a rent-to-own type deal.
What sort of expenses do you need to factor in (ie. mortgage, property tax, utilities, etc,.) when trying to determine the rent to charge in order to generate a positive cash flow from your investment? In other words how would one determine if the investment is a sound investment?

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May 20, 2011
RE: Crunching the Investment Property Numbers
by: Tom Karadza

There's a lot to share on this...

First, you want to be investing in the right area of the province and/or city. That makes your investment a lot safer because its value will often rise along with the rising tide of a good community.

As for the expenses on a single family... you'll want to look at mortgage payment, taxes, insurance and utilities during periods of vacancy (tenants pay for utilities in our properties once they've moved in). After that it's a good idea to build up an emergency fund for unexpected repairs. $5,000 for that is a good number but we're really generalizing here so it'll be different for each property and each property type.

Tom

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