San Jose investment property analysis

This is a typical single family investment property in San Jose.  This is a 3 bedroom 2 bath, with converted garage.  According to county record, it has about 1200 sq ft. (excluding the converted garage).  The purchase price is under $330,000.

The garage is converted into a 1 bedroom 1 bath with living room, it can be rented out separately or the house can be rented to a big family, which is typical in this area.

Assume the purchase price is $330,000 and the mortgage rate is 6.857%, the following analysis is for different % of down payment.


Purchase price: $330,000 with 20% down

Sales Price:

$330,000

% Down:

20%

$ Down:

$66,000

Loan Amount:

$264,000

Interest Rate:

6.875%

Mortgage Payment:

$1,734.29

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$2,145.04

Projected rent:

$2,000.00


Purchase price: $330,000 with 20% down, interest only

Sales Price:

$330,000

% Down:

20%

$ Down:

$66,000

Loan Amount:

$264,000

Interest Rate:

6.875%

Mortgage Payment:

$1,513.00

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,923.00

Projected rent:

$2,000.00


Purchase price: $330,000 with 30% down

Sales Price:

$330,000

% Down:

30%

$ Down:

$99,000

Loan Amount:

$231,000

Interest Rate:

6.875%

Mortgage Payment:

$1,517.51

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,928.26

Projected rent:

$2,000.00


Purchase price: $330,000 with 30% down, interest only

Sales Price:

$330,000

% Down:

30%

$ Down:

$99,000

Loan Amount:

$231,000

Interest Rate:

6.875%

Mortgage Payment:

$1,323.44

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,734.19

Projected rent:

$2,000.00

A few years back, it is impossible to put 20~30% down in a property in the Bay Area that would cash flow.  Last time this happens was over 10 years ago, around 1995.  If you miss the boat this time, you might need to wait another 10 years.

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