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Case Study

Case Study . Presented by: Shane Baldwin Clyde gerome Isaac kershner. 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

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Case Study

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  1. Case Study Presented by: Shane Baldwin Clyde gerome Isaac kershner

  2. 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

  3. Differentiating Needs from Wants Needs Wants Space for themselves and 3 children Privacy Safe neighborhood Excellent Schools for Children Nice Neighbors Shopping relativity close

  4. 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 --- 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 Housing option #1

  5. Pros and Cons (Continued)Apartment $1530-$1605 per month Pros Cons • No commitment • Not responsible for repairs • Off street parking • Utilities included with rent • Air conditioning • Rent is expensive • Only two bedrooms • More than twenty minutes from work • Poor school district • Pay a deposit • No private yard for the kids

  6. 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 sqft Lot:4,791 sqft Year Built:1952 Last Sold:Nov 2009 for $85,000 Hosing Option #2

  7. Pros and Cons (Continued)House$269,000 base mortgage $748 per month 30 years Pros Cons • Newly remodeled • Central air • Yard and finished basement • Detached garage • Mid budget • Independence • Build Equity • Only three bedrooms • More than 20 minutes from work • More than 20 minutes to shopping center • All responsibilities as a home owner

  8. 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 sqft Lot:1,316 sqft Year Built:2004 Last Sold:Mar 2005 for $275,000 Heating Type:Forced air Housing Option #3

  9. Pros and ConsCondo cost $249,990 base mortgage – $695 per month 30 years Pros Cons • Low end of budget • Good location, with in 20 minutes from work and close to a shopping center • Nice neighborhood • Good/ close schools for the kids • Shared condo pool • No yard for the kids • Less bed rooms than desired • No air conditioning • Increased possibility of noise neighbors at such a close proximity • HOA fees

  10. 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 Housing Option #4

  11. Pros and Cons (Continued)Duplexcost $325,000 Base Mortgage- $1345.33 per month 30 years Pros Cons • Is the desired size • Revenue generating from renting out the basement ($700-$800 per month) • With in twenty minutes of work • Yard for the kids • Build Equity • More responsibilities as land lords • Property tax • Older neighborhood • Sharing a house and yard with strangers • Need more savings to pay mortgage if renters move out • High end of budget if renters are not found

  12. Renting Apt vs. Buying Duplex 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

  13. 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

  14. If they purchase the duplex they can rent out all available space to use the duplex as their “Cash Cow” to save up to eventually move into their own home. The Duplex is the Best Housing Option

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