presented by: shane baldwin clyde gerome isaac kershner case study
TRANSCRIPT
Greg and Cindy Hana
• Greg is sole breadwinner and earns $66,000 annually • Eligible for pension when he is 48
• The couples current net worth is $35,500• $3000 CD• $2,000 in checking • $6,500 of life insurance cash value • Two cars worth $2,000• $22,000 Savings
• Greg saves $350 a month in differed compensation plan offered by his work
• The couple has: • $1,000 dollars of stock• $2,000 in mutual funds
• Monthly expenses average $2,800• They qualify for a 4.68% interest rate on a 30 year loan with a
credit score of 688
Needs Wants
Space for themselves and 3 children
Privacy Safe neighborhood
Excellent Schools for Children
Nice Neighbors Shopping relativity
close
Differentiating Needs from Wants
Housing option #1
Two Bedroom One Bath
(866) 517-2555
26 Parkway East #B1 Caldwell, NJ 07006-6025
Name: Two Bedroom One Bath
Beds: 2
Baths: 1
Price Range: $1530-$1605
Min/Max Ft: 900ft²
Availability: Contact Us
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Features:
• Heat, Hot Water, & Cooking Gas Included
In Rent!
• Renovated Kitchens w/ Dishwasher,
Microwave & Gas
• Hardwood Floors
• Air Conditioners Supplied
• Patios and Balconies in Some Residences
• On-Site Manager
• Great Closet Space w/ Closet Organizers
• Window Treatments
• Off Street Parking
• High Speed Internet Available
Pros Cons
No commitmentNot responsible for
repairsOff street parkingUtilities included
with rentAir conditioning
Rent is expensiveOnly two bedroomsMore than twenty
minutes from workPoor school districtPay a depositNo private yard for
the kids
Pros and Cons (Continued)
Apartment $1530-$1605 per month
Hosing Option #2
37-39 Scheerer Ave, NEWARK, NJ 07112
For Sale: $269,000
Zestimate®: $240,920
Est. Mortgage: $1,053/mo
See current rates on Zillow
Bedrooms:3 beds
Bathrooms:3 baths
Single Family:1,664 sq ft
Lot:4,791 sqft
Year Built:1952
Last Sold:Nov 2009 for $85,000
Pros Cons
Newly remodeledCentral airYard and finished
basementDetached garageMid budgetIndependenceBuild Equity
Only three bedrooms
More than 20 minutes from work
More than 20 minutes to shopping center
All responsibilities as a home owner
Pros and Cons (Continued)
House$269,000 base mortgage $748 per month 30 years
Housing Option #3
33-37 New York AveAPT 2A, Newark, NJ 07105
For Sale: $249,990
Zestimate®: $234,214
Est. Mortgage:
$979/mo
See current rates on Zillow
Bedrooms:3 beds
Bathrooms:2 baths
Condo:1,317 sq ft
Lot:1,316 sqft
Year Built:2004
Last Sold:Mar 2005 for $275,000
Heating Type:Forced air
Pros Cons
Low end of budgetGood location, with
in 20 minutes from work and close to a shopping center
Nice neighborhood Good/ close schools
for the kidsShared condo pool
No yard for the kidsLess bed rooms
than desiredNo air conditioning Increased
possibility of noise neighbors at such a close proximity
HOA fees
Pros and ConsCondo
cost $249,990 base mortgage – $695 per month 30 years
Housing Option #4
156 Mapes Avenue, Newark, NJ 07112
Price: $325,000
No. Units: 3
Building Size: 2,800 SF
Price/Unit: $108,333.33
Property Type: Multifamily
Property Sub-type: Duplex/ Triplex/ Fourplex
Property Use Type:Investment
Pros Cons
Is the desired sizeRevenue generating
from renting out the basement ($700-$800 per month)
With in twenty minutes of work
Yard for the kidsBuild Equity
More responsibilities as land lords
Property taxOlder neighborhoodSharing a house and yard
with strangersNeed more savings to pay
mortgage if renters move out
High end of budget if renters are not found
Pros and Cons (Continued)
Duplexcost $325,000 Base Mortgage- $1345.33 per month 30 years
Renting Duplex
Low commitment Not having to pay
for utilities In desired area Cost between
$1530-$1605 per Month
No backyard for kids
30-year mortgage paying $1345.33 per month (4.68% interest)
Possibility to rent you 2nd part of duplex
Back yard for kids Right size for family
Renting Apt vs. Buying Duplex
How much is necessary for a down payment on the Duplex?
$65,000 is necessary for a down payment
Attainable in 12 months if they save $2,500 a month
$224,322.46 paid in interest over 30 years
Total of $484,318.80 paid over the course of the 30 year loan
It will take 30 years to pay off the home unless they double payments to pay it off sooner.
If they double their payments by, perhaps, using rent from the other portions of the duplex their total investment would be $326965.28 in the course of 10-11 years