you are on the right track. Generlaly speaking, I use a 40% expense load to estimate prop taxes, insurance, repairs, maintenance, and VACANCY. basically everything except debt service.
however, any owner-paid utilities, yard care or management fees are not included in the load, and need to be added in.
if a property is brand new construction, I will lower the load to 35%, as I wil not have a lot of repairs or maintenance, and I tend to have slighly lower vacancy. But for older properties, I use a higher load.
I found a property that sounds like a good deal. Wanted to run this past you guys and also see about getting financed.
2 buildings - 4 units total (two duplexes)
each unit is a 2bd, 1ba
They are asking $133,000 for all 4 units. All are currently rented, generating $1325 a month. Tax is about $930 a year and owner would have to pay insurance.
I estimate the payment on this would run about $918 (100% LTV). Seems you could still turn positive cash flow even with all expenses, including property management.
What do you think? Anybody able to do 100% financing or close to it? I have excellent credit, secured assets, and documented income.
Alright… what numbers should I be looking for? I’ve heard some say to look for positive cash flow after you take the gross rent minus 50% expenses and then subtract the mortgage payment.
I don’t think you’re going to find 100% financing on a NOO property (ies). I reserve the right to be wrong.
That being said, you’re going to have to put some of your own dough into the deal.
It’s going to be a while before you see a return on your cash investment. If $918 was your P&I, you still have to pay the taxes, and that leaves you $329.50/month cashflow before insurance, vacancies, repairs, and property management, as you state.
Way too much at risk for very little, if any, reward. On to the next one. Hopefully, you haven;t fallen in love (nor will you ever with any RE investment deal) with it. It’s the numbers, period.