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Case Study

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

Differentiating Needs from Wants
Needs Wants

 Space for themselves

 Excellent Schools for

and 3 children  Privacy  Safe neighborhood

Children  Nice Neighbors  Shopping relativity close

Two Bedroom One Bath (866) 517-2555 26 Parkway East #B1 Caldwell, NJ 070066025 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

Pros and Cons (Continued) Apartment
$1530-$1605 per month

Pros

Cons

 No commitment  Not responsible for

 Rent is expensive  Only two bedrooms  More than twenty

repairs  Off street parking  Utilities included with rent  Air conditioning

minutes from work  Poor school district  Pay a deposit  No private yard for the kids

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

Hosing Option #2

Pros and Cons (Continued) House
$269,000 base mortgage $748 per month 30 years

Pros

Cons

 Newly remodeled  Central air  Yard and finished 

 Only three bedrooms  More than 20 minutes


 

basement Detached garage Mid budget Independence Build Equity

from work  More than 20 minutes to shopping center  All responsibilities as a home owner

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

Housing Option #3

Pros and Cons Condo
cost $249,990 base mortgage – $695 per month 30 years

Pros
 Low end of budget  Good location, with in 20

Cons

 No yard for the kids  Less bed rooms than

minutes from work and close to a shopping center  Nice neighborhood  Good/ close schools for the kids  Shared condo pool

desired  No air conditioning  Increased possibility of noise neighbors at such a close proximity  HOA fees

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

Pros and Cons (Continued) Duplex
cost $325,000 Base Mortgage- $1345.33 per month 30 years

Pros

Cons
 More responsibilities as    

 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

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

Renting Apt vs. Buying Duplex
Renting Duplex

 Low commitment  Not having to pay for

 30-year mortgage

utilities  In desired area  Cost between $1530$1605 per Month  No backyard for kids

paying $1345.33 per month (4.68% interest)  Possibility to rent you 2nd part of duplex  Back yard for kids  Right size for family

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 1011 years

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