Thursday, June 30, 2005

More About those Long Branch Condos

The Wall Street Journal gave some interesting data about the new condos going up in Long Branch between Ocean Avenue and the beach.

“Those who accepted the offer also would have annual maintenance fees waived for 10 years, and for up to five years homeowners would pay what they're currently paying in taxes, Mr. Russo says. After the fifth year, taxes would be rise to what other condo-owners pay. On an average condo in the $600,000 range, taxes range between $12,000 to $13,000, according to Glenn Ward, sales and marketing director at Matzel & Mumford. The maintenance fee on condos is $343 a month.”

In one of my posts from last week, I mentioned that some of those condos are already for rent and that the rents are as cheap as $2200 per month. Given what we now know is the monthly maintenance and property tax bill, it is hard to imagine that the people playing landlord with these condos are not suffering from some serious cash flow problems.

Say you are a landlord and you rent out one of these places for $2500 per month. Then you pay total monthly maintenance and property taxes of $1,343 and only net $1,157 and you haven’t even made your mortgage payment yet. Even if you took out a mortgage of only $250,000, instead of $500,000, your monthly mortgage payment would be $1,342 at a very low rate of only 5%. Needless to say, your negative cash flow each month would be about $186.00.

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