Individual Case Study
Continuing to Rent a Single Tenant Row Home in Baltimore City versus Selling the Home and Purchasing a Duplex for Dual Tenants
For Professor Joseph H. Myers

J. Wendy Player
University of Maryland University College
TMAN 625
2012 Fall Semester

Table of Contents Introduction 3 Analysis Method 3 Current Row Home Amortization- One Tenant Home 4 Future Duplex Home Amortization- Two Tenant Home 5

Introduction
I have attached several Microsoft Excel Spreadsheets that goes over a cost analysis on continuing to rent a row home in Baltimore City to one tenant versus selling the home and purchasing a duplex to rent to two tenants in another part of Baltimore City both in Maryland. This analysis looks at the cost of continuing to rent the current home over the course of five years vs. selling the home in the current market and purchasing a duplex. The following assumptions are made: interest rate is between 6.125% old mortgage and 4% new mortgage and is 90% financed, all closing costs and fees paid up-front during closing, and PMI was not needed for the old mortgage but will be needed for the new mortgage because this is a rental property and not a primary residence.
Analysis Method
For this analysis, I looked into three locations throughout Baltimore city that I wanted to focus my efforts. From there, I found the average cost of homes in each location from www.zillow.com and compiled lists of duplex homes that were move in ready or that needed minimal work. I found one in particular that was move in ready already split into two apartments. The first floor is a one-bedroom apartment and the second floor is a three bedroom apartment. The property could use a little work to add value to the property and is a foreclosure. It is near Johns Hopkins Hospital in a residential area, close to a super market, and Penn Station.

Current Row Home Amortization- One Tenant Home

Loan Amortization | | | | | | | | Lawnview Ave Baltimore MD 21213 | | | Loan Amount: | $72,421.78 | | | | | Interest Rate: | 6.125% | Past Rate from 2006 Loan | | | Nper: | 23.6 | | | | | | Monthly Payment: | $490.17 | | | | | Payment per year: | $5,882.04 | | | | | Total Interest (5yrs): | $21,237.43 | | | | | Principal Paid (5yrs): | $8,172.77 | | | | | | | | | | | | Year | Payment | Interest | I. Cumulative | Principal | P. Cumulative | Balance | | | | | | | $72,421.78 | 1 | $5,882.04 | $4,435.83 | $4,435.83 | $1,446.21 | $2,892.41 | $70,975.57 | 2 | $5,882.04 | $4,347.25 | $8,783.09 | $1,534.79 | $2,980.99 | $69,440.79 | 3 | $5,882.04 | $4,253.25 | $13,036.34 | $1,628.79 | $3,075.00 | $67,811.99 | 4 | $5,882.04 | $4,153.48 | $17,189.82 | $1,728.56 | $3,174.76 | $66,083.44 | 5 | $5,882.04 | $4,047.61 | $21,237.43 | $1,834.43 | $3,280.64 | $64,249.01 | | | | | | | |

Loan Amortization | | | | | | | | Lawnview Ave Baltimore MD 21213 | | | Loan Amount: | $72,421.78 | | | | | Interest Rate: | 6.125% | Past Rate from 2006 Loan | | | Nper: | 23.6 | | | | | | Monthly Payment: | $490.17 | | | | | Payment per year: | $5,882.04 | | | | | Total Interest (5yrs): | $21,237.43 | | | | | Principal Paid (5yrs): | $8,172.77 | | | | | | | | | | | | Year | Payment | Interest | I. Cumulative | Principal | P. Cumulative | Balance | | | | | | | $72,421.78 | 1 | $5,882.04 | $4,435.83 | $4,435.83 | $1,446.21 | $2,892.41 | $70,975.57 | 2 | $5,882.04 | $4,347.25 | $8,783.09 | $1,534.79 | $2,980.99 | $69,440.79 | 3 | $5,882.04 | $4,253.25 | $13,036.34 | $1,628.79 | $3,075.00 | $67,811.99 | 4 | $5,882.04 | $4,153.48 | $17,189.82 | $1,728.56 | $3,174.76 | $66,083.44 | 5 | $5,882.04 | $4,047.61 | $21,237.43 | $1,834.43 | $3,280.64 | $64,249.01 | | | | | | | |

Current Home Value is $97321- Zestimate

Future Duplex Home Amortization- Two Tenant Home

Loan Amortization | | | | | | | | 2603 Maryland Ave Baltimore MD 21218 | | | | Down Payment: | $4,323.01 | =10% of Loan | | | | Loan Amount: | $43,230.08 | | | | | Interest Rate: | 4% | Current rate from 2012 Loan | | Nper: | 30 | | | | | | Monthly Payment: | $208.33 | | | | | Payment per year: | $2,500.00 | | | | | Total Interest (5yrs): | $8,325.12 | | | | | Principal Paid (5yrs): | $4,174.88 | | | | | | | | | | | | Year | Payment | Interest | I. Cumulative | Principal | P. Cumulative | Balance | | | | | | | $43,230.08 | 1 | $2,500.00 | $1,729.20 | $1,729.20 | $770.80 | $1,541.59 | $42,459.29 | 2 | $2,500.00 | $1,698.37 | $3,427.57 | $801.63 | $1,572.43 | $41,657.66 | 3 | $2,500.00 | $1,666.31 | $5,093.88 | $833.69 | $1,604.49 | $40,823.96 | 4 | $2,500.00 | $1,632.96 | $6,726.84 | $867.04 | $1,637.84 | $39,956.92 | 5 | $2,500.00 | $1,598.28 | $8,325.12 | $901.72 | $1,672.52 | $39,055.20 |

Loan Amortization | | | | | | | | 2603 Maryland Ave Baltimore MD 21218 | | | | Down Payment: | $4,323.01 | =10% of Loan | | | | Loan Amount: | $43,230.08 | | | | | Interest Rate: | 4% | Current rate from 2012 Loan | | Nper: | 30 | | | | | | Monthly Payment: | $208.33 | | | | | Payment per year: | $2,500.00 | | | | | Total Interest (5yrs): | $8,325.12 | | | | | Principal Paid (5yrs): | $4,174.88 | | | | | | | | | | | | Year | Payment | Interest | I. Cumulative | Principal | P. Cumulative | Balance | | | | | | | $43,230.08 | 1 | $2,500.00 | $1,729.20 | $1,729.20 | $770.80 | $1,541.59 | $42,459.29 | 2 | $2,500.00 | $1,698.37 | $3,427.57 | $801.63 | $1,572.43 | $41,657.66 | 3 | $2,500.00 | $1,666.31 | $5,093.88 | $833.69 | $1,604.49 | $40,823.96 | 4 | $2,500.00 | $1,632.96 | $6,726.84 | $867.04 | $1,637.84 | $39,956.92 | 5 | $2,500.00 | $1,598.28 | $8,325.12 | $901.72 | $1,672.52 | $39,055.20 |

Future Duplex Home – Two Tenant Home

Current Home Value is $85249 - Zestimate