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Investment property

Hi! I am looking to buy an investment property in Dupont Circle, one block from the metro. It's a junior one bedroom. Asking price is $230,000; property taxes $1,870; condo fees $350. There's a tenant in it whose lease expires in March, 2012, so that first year I will be getting income of $1,600 from that tenant who is there until the end of his lease. Two questions: do you think this is a good investment? How do I calculate income taxes on this kind of investment to figure out net income at the end? Thanks. 
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April 17 2011 - Washington
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Click on the followed link and fill in the text boxes the information then hit the 'Answer' button. If the 'Net Income' column shows all the negative numbers then it is no good investment.
http://homesand.net/Renta ... ment.aspx
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April 17 2011
Get a Schedule E and go over the expense for a rental property if you don't want to hire a professional. Available www.irs.gov

Purchase H & R Block Basic Tax Software and key in the numbers to the Schedule E. If you understand that you can deduct lots of different things this will give you a fairly accurate figure.

You did not mention your note and closing cost, but you have

$1600 x 12 = $19,200 gross income for the year

Take all of your expenses $350 x 12 = $4200
Taxes $1870
Insurance ???
Interest paid in the year.
All expenses are needed to calculate correctly and closing cost etc.

Below is most basic rate of showing if you paid cash and only counted the income.

19,200 /230,000 = .0834 or 8.34 % not a bad rate considering what you
could earn on the money if you had it in a cd.

Good Luck!

James Callas - Realtor®
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April 17 2011
 
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