Investing in Harrisonburg Real Estate


Investing in Harrisonburg Real Estate
By Scott Rogers • July 26, 2010
Investing in real estate isn't for everyone --- and it isn't without its risks. But if you have some money to put into an investment as a down payment, and if you have financial reserves with which to cover maintenance costs and months without rental income, you might be interested in learning more. The easiest case study of real estate investing in Harrisonburg is to consider the purchase of a two-story townhome built in the last ten years. There are quite a few neighborhoods where these townhomes can be purchased, somewhere between $130k and $160k: Avalon Woods Beacon Hill Blakely Park Harmony Heights Liberty Square Wellington Park These two-story townhouses in these neighborhoods will likely rent for between $850 to $950 depending on the age and condition. View them on a map here. Next, let's assume a great deal on the purchase (we'll shop until we find that deal) with a purchase price of $129,900. However, we'll make lots of conservative assumptions as we continue. For the time being, assume: $850 / month rental income Half a month's rent lost each year between tenants 20% down payment, the balance financed at 5% This results in an estimated $927 of positive cash flow in the first year... This might not seem like much, but when combined with a few other investment benefits, it starts to add up, even in the first year. Year 1 Investment Benefits $926 positive cash flow $1,533 principal reduction via rental income $638 tax benefit for loss based on depreciation Total "Gain" = $3,097 It gets even better when considering the property over five years: $6,990 positive cash flow $8,492 principal reduction via rental income $2,394 tax benefit for loss based on depreciation Total "Gain" = $17,876 And if we assume a meager 2% of appreciation per year, then, over five years we'll see: $6,990 positive cash flow $8,492 principal reduction via rental income $2,394 tax benefit for loss based on depreciation $13,520 appreciation Total "Gain" = $31,396 Do recall, that you put 20% down ($26k) and paid some closing costs ($4k), so after five years you have more than doubled your money. There are plenty of variables to consider when buying an investment property, but the basics of the cash flow are the first to thoroughly understand. For a head start on everything else you need to learn, review this detailed investment analysis. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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