» A Blackstone rental in Tampa with four bedrooms and two baths was listed for $1,500 a month. Blackstone purchased the home for $120,000.

Initial Purchase 2012

Price of home	$120,000
Initial repairs and rehab	$15,000
Total investment:	$135,000

 

Operations, 2012-17

Annual gross rental @$1,500 a month	$18,000
Less vacancy, marketing, upkeep and taxes	(-$7,700)
Depreciation (paper loss that translates into tax savings)	(-$4,363)
Annual net rental income	$10,300
Annual return from rent / Cap rate	8.6%

 

Exit Strategy, 2017

Expected sales price	$150,000
Net on principal (sales price minus purchase price plus rehab)	$15,000
Net rental income (over five years)	$51,500
Tax benefit (over five years, assuming 35% corporate rate)	$7,635
Total return over five years	$74,135
Total return on equity (before capital gains)	11+% per year

 

*This hypothetical example uses sales data, tax records and rental listing for a four-bedroom, two-bath home that Blackstone purchased in Tampa last year. All other figures are estimates based on conversations with experts in the industry.