PITI

Next are your property taxes, and yeah, this is gonna be an ongoing cost.

It's the T in your PITI, principal, interest, taxes, and insurance.

But of course, you're gonna have already discussed how your taxes work in your pre-planning with your real estate support team.

Because when you find a home you like, don't use that listing information as your Bible.

So I like to visually show people that when you borrow money to buy a home, think of that as the rice, the principal.

And then the next I in PITI is the interest.

That's the soy sauce.

Ideally, you want the best lowest sodium soy sauce you can get.

I know people in Florida are feeling it, but they're always feeling it on those taxes put on insurance.

But when you're getting these and you're acquiring these, when you're writing these things out, when you're doing your PITI and your pro forma, take into consideration that buffer that you might need for this next however allotted amount of time for when those property taxes go up.

Because you can't just go to the bank when you're taking over a mortgage that's not yours and talk about it in most cases.

So when you're underwriting and doing your PITI stuff, Just remember that those escrow audits and take economic factors into consideration.

So I think that's more for my market, but also just nationally.

Fair points right there, Josh.

The one caveat on FHA, which makes the conventional loans a better choice, when you're doing a multi-unit, on three and four units with FHA, the property has to debt service itself.

So they're gonna look at 75% of the rents, the proposed rents on all four units, And the gross rents have to debt service the PITI, the principal interest taxes and insurance.

So that's on

FHA with the 3.5% down.

In Florida, a real estate license is required to sell or lease business enterprises if the transaction includes an interest in real property.

To remember the key tax deductions for an investment property, think of the acronym PITI.

That's principal, interest, taxes, and insurance.

But wait, for taxes it's not principal.

So, and what that covers is gonna give you typically a clubhouse, a pool maybe, maybe a pickleball court, a walking trail, community amenities that you're gonna pay for, but they'll roll it into your property taxes, which will make your property taxes a little bit higher, which again is part of your monthly payment.

You've heard of PITI, principal interest taxes and insurance, PITI.

So part of that principal interest taxes is your property taxes.

That CDD fee would be in the property taxes.

And I only knew that because of the micro market experience of running one of these already.

So the principal interest taxes and insurance, the PITI on it is around 6,200.

So I knew that at least...

Right now, even if I long term rented the whole thing at $2,000 a unit, which I can do, that the baseline expenses would be covered, plus having that $1,800 a month of wiggle room for expenses.

So that is the next piece of the puzzle.

So I'm giving myself some choices right now of which path to ultimately go with, but right now we'll stabilize at 9,500 a month.

We'll have the wiggle room of, you know, a couple grand outside of the PITI to really make this work.

So that is where I know, okay, if I can at least get enough, you know, $2,000 a month is really a comfortable wiggle room, in my opinion, on something like this.