Read the instructions for IRS form Schedule E.

__________________
WHYY pays their CEO $750,000 a year. So WHYY should I renew my membership? Seems they have no problems finding money and spending it unwisely.


And this is why you should donate to PACCA, not PETA:

In September, PETA made headlines in Vermont and across the nation for asking Ben & Jerry's ice cream to use human breast milk in their ice cream, instead of cow milk

$300,000 debt at today's 30 yr fixed rate 5.75% is only $1750/month.

__________________
~Lets cut taxes and pensions out of Philadelphia.
http://www.philadelphiaforward.org

covered parking in Market West runs $250/month.

__________________
~Lets cut taxes and pensions out of Philadelphia.
http://www.philadelphiaforward.org

Manhattan Apartment Prices Hit Record High Despite Slump

While most of the nation plods through a housing slowdown, Manhattan is experiencing its highest prices in history.
The average price of a Manhattan apartment in the first three months of this year was $1.7 million, up 33.5 percent from the same period last year, according to the real estate appraisal firm Miller Samuel Inc., which processed the numbers for the brokerage firm Prudential Douglas Elliman.

http://www.nytimes.com/2008/04/02/ny.../02prices.html

__________________
~Lets cut taxes and pensions out of Philadelphia.
http://www.philadelphiaforward.org

Murano - 1/1

Price $ 375,000

Cost Monthly Annual

Mortgage $ 2,248 $ 26,976
Taxes $ 313 $ 3,750
HOA Fees $ 500 $ 6,000
Insurance $ 156 $ 1,875
Repairs/Maintenance $ 167 $ 2,000
Utilities $ 100 $ 1,200

Total $ 3,483 $ 41,801

Monthly Rent (Gross) $ 1,500 $ 18,000

Net Cash Flow $ (1,983) $ (23,801)

I don't know what I enjoy more about your analysis:

1. that you assume the buyer bought the least expensive unit in the building and put money down; basically admitting that if he bought anything more expensive he's screwed. (Also assuming that someone would be willing to rent the crappyist unit in the building for top dollar).

2. that you left out the condo association fee. At $600 and your best case scenario -- he's still losing money.

Found it - actually on the 8582 instructions.

Gekko - To be fair, I would make a couple adjustments to your calculation. First, the taxes are more than I pay living in a similarly priced home in the same neighborhood and I have no tax abatement - shouldn't the Murano folks pay negligible taxes for 10 years? Second, that's also more than I'm paying in insurance, and my understanding was that insurance on a condo was significantly less than than on a single family home. Third, you don't describe the type of mortgage your theoretical lessor has. As you focus is on cash flow, you ought to assume an interest-only mortgage, which (assuming a 6% rate) would lower the mortgage payment you're using. If you're assuming a conventional mortgage (which it appears you are), you ought to factor in the hypothetical lessor's monthly equity gain.

I agree with your conclusion that someone who bought a unit in the Murano with the intention of renting it out is going to loose money, but don't overstate your case.

Again, until that building is complete and the tax records become public, NOBODY knows what kind of deposits those people have put down on their condos. I know plenty of people who put down rather hefty deposits to keep their expenses low. If anyone expects to make a profit in any luxury building with maintenance fees that high, with only 20% down, they are foolish. In any building like that, you would need at least 35 or 40% down to make money. Could you imagine trying to rent out a 1BR at Symphony House for which you paid $650K??? I think if anyone has a shot, it would be the people who paid in the $300Ks.

regardless of down payment, i don't think anyone would be stupid enough to buy a condo there with the sole intention of landlording

the 1% heuristic states a property is worth 100X the monthly rent
with sub-6% mortgages you might be able to stretch that to 120X