Posted by Arthur on August 24, 2003 at 05:23:18:
No, 20-25% is what alot of people use,although alot of people will go with 10%. its always better to take a worse case senario, that way, you won’t get burned in the future.
When a place becomes vacant, it may take 2 months to get it fixed up, and get it rented (remember, you have to advertise for the tenants, get them to fill out forms, run checks on them etc.
I’ve read a few books on investing, and a few of the “gurus” first used 5% when they started and they had a nasty shock.
Not sure if the 25%+ some people use includes repair costs, but remember, 5% means on average, each unit will be vacant 2.5 weeks a year.
I’m in a lucky situation where i can get a property ready for rental in anything from a few hours to a couple of days, but i am in the situation where i do this full time and therefore can go to the property the minute i get the call, and also lucky enough to be dealing in emergency housing, so get paid rents 52weeks of the year, vacant or not.