Posted by chill on September 27, 1999 at 15:08:17:
Rob,
You sound like someone who knows the rental business. Can you tell me where I can find a good lease agreement (this is for a condo – it’s for a renewing tenant – I don’t like the old lease I had). (I am in Texas.) I need one I can download quickly, as I need it by tomorrow. I will pay a reasonable fee for it.
Thanks.
Rental units and POSITIVE CASH FLOW - Posted by Carey_PA
Posted by Carey_PA on September 26, 1999 at 14:43:43:
I’m just curious folks,
When you are looking at a rental property, how much positive cash flow do you look for per month?
I just looked at a duplex and I get a positive cash flow of about $177/month. That’s if I figured my numbers correctly.
Is this good, bad, or what? and if you tell me it’s good, what if there are repairs that need to be made on a certain month, etc. (I didn’t figure any repair costs in to get me the $177/mo…i just went by rents - taxes - mortage - sewer/trash = $177/mo)
Also, I will be lease purchasing this for a year, if my offer gets accepted and I will be making $285 per month, that’s not counting any minor repairs that may come up.
After the l/p, i’m hoping to get a mortgage for it and hold onto it as a rental.
Well thanks in advace for all your responses.
CAREY
Re: Rental units and POSITIVE CASH FLOW - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on September 28, 1999 at 11:47:49:
Personally, I buy no property that will not net me $200 positive cash flow per month for rental purposes. Now when I say net, I mean the real net. That is, take the total rent, subtract the mortgage payment, subtract any other expenses (association dues, insurance, …etc) and subtract 30% for vacancies and for repair expenses. Then you will get a true picture of how much cash flow you are likely to make.
It takes too much time to effectively manage rental properties to settle for a measly $100 per month.
Just my .02
Re: Rental units and POSITIVE CASH FLOW - Posted by Rob FL
Posted by Rob FL on September 26, 1999 at 22:32:53:
My general rule of thumb is at least $100 per month positive cash flow before the repair allowance. Just make sure that for $100 the property is not so old that it has a good chance of needing lots of expensive repairs. Make sure the tenants pay the first $30-100 worth of repairs each month to keep down your costs.
Re: Rental units and POSITIVE CASH FLOW - Posted by Mark Mallen
Posted by Mark Mallen on September 26, 1999 at 17:14:16:
How much cash flow you would like to have a month depends on your personal situation. If you put down $4,800 on a $100,000 property and clear $4,800 a year, you would have a 100% yearly return on investment. That would be a great investment if you can do that for the term of the mortgage. If your mortgage was for 15 years, you would have a total return of 72,000 rental income, $100,000 paid off property, plus any appreciation on the property in 15 years. I have simplified the figures but a minimum $172,000 return on an investment of $4,800 will beat any stock fund. The negatives are that you have to worry about maintenance, repairs, and vacancies. I always deduct at least 10% of gross rents for maintenance and repairs and 10% for vacancies. These figures rise as the income level of the tenant goes down. You have to use a 40%-50% maintenance and repair deduction on some inner city properties. Talk to landlords at your local real estate association to find the averages for your target area.