Posted by Don (VA) on April 16, 2010 at 15:14:48:
You need to do a lot more research.
For example, you ask: “Is there a percent increase over Debt Services that the one charges the rentee?” No. Your debt service has absolutely nothing to do with what you charge in rent. Nothing. Nada Zip. What you charge the tenant (rentee?) is what the going rate is. Try charging a penny more, and you won’t have any tenants. So you have to work backwards and say: “For this type of property, what are comparable rents?” Then you have to make the numbers work–how can you keep your total costs (not just debt service, but repairs, maintenance, vacancy allowance) below the rental income.
On your list of monthly expenses, you list insurance, mortgage, and taxes. How about maintenance? Repairs? Vacancy allowance? Expenses of finding a tenant? (Maybe an annual cost, but you’d spread it out over the 12 months.) How about positive cash flow? It’s not an expense, but it has to be factored in. How about an umbrella insurance policy? How about a homeowner’s warranty?
As far as one-time charges, ask a Realtor to run a good faith estimate on a sample property. There may be a transfer tax, other miscellaneous fees, title insurance, possibly points on the mortgage, and on and on and on.
Your concept is a good one. But you need a lot more details, and a much better understanding, to make it work.