Case Study – Single Family Home p1

    13304 wisterwood

    In this post, lets calculate the capital gains if we were to purchase this Austin  investment home.

    • HUD home in NW Austin
    • 3 bed 2 bath 2 car garage
    • 1284 sq ft
    • 1 story
    • Built in 1976

    Lets estimate capital gains on the purchase.  Here are the relevant stats:

    • List price: $117,000
    • Market value: $140,000
    • Repairs/makeready: $5,000
    • Closing costs: $3,725

    Market value – Purchase price – Closing costs – Repairs = Capital Gain

    $140,000 – $117,000 – $3,725 – $5,000 = $14,275 Capital Gain

    Using conventional financing at 25% down, lets calculate how much cash we need to get this property ready to rent.

    Down payment + Closing costs + Repairs = Cash Out of Pocket

    $29,250 + $3,725 + $5,000 = $37,975 Cash Out of Pocket

    What this means is we have a

    Capital Gain / Cash Out of Pocket = $14,275/$27,975 =

    37.6% return on our cash!

    Yes, this is a very simplified exercise.  No, we didn’t talk about where some of the numbers came from, like the market value or the repair costs.  But now we have a good overview of how to evaluate capital gains.

    Have any questions?  Leave a comment below!

     

     

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