Posted by PBoone on April 14, 2000 at 22:02:19:
is take rental amount x .25 - mortgage payment = profit
that is the generic rule and it does work for most SFR’s
Pat
How Much Should I Estimate for Unknown Expenses? - Posted by Kevin
Posted by Kevin on April 14, 2000 at 21:53:44:
I’d like to rent out my townhouse in a few years and when I do the numbers, I get all different kinds of results. The reason is, I have never done this before so I don’t know what a good estimation is. I’d like to get more exact figures so I can determine if I can rent out the townhome. For the pros out there, what do you plug into your calculations for the following items?
- Maintenance for a townhome
- Insurance for a townhome
- How much to include for “miscellaneous”
- Advertising
- Management (if I opt not to manage it myself)
Re: How Much Should I Estimate for Unknown Expenses? - Posted by Bill Gatten
Posted by Bill Gatten on April 16, 2000 at 14:59:56:
My rule of thumb: Use from 1% to 2% of the property’s value per-year for maintenane, advertising, repair and upkeep (1% on a newer property and 2% on an older one). Then consider the cost of 1 to 2 missed rental payments per-year for your vacancy factor (i.e., payments made to the bank when there is no rental income). The vacancy factor can be mitigated, of course, by long-term leases and/or lease options (or…by giving the tenant some ownership in a 3rd party trustee, co-beneficiary land trust conveyance, you can eliminate all such costs).
Bill Gatten