Originally Posted by Fishingmn
30% is low in my opinion.
If you spend any time on www.biggerpockets.com
(the biggest real estate investor website) you'll see lots of posts advocating a 50% rule. Now that assumes you are using a property manager and I do think it's probably lower for single family. Still I budget for 41.7% on my current properties and that's with me managing them.
Here's what a typical place of mine looks like -
Rent $1,050/mo = 12,600 gross income
Expense projection -
Vacancy (5%) - $630
Accounting/Legal - $100
Insurance (Landlord rider) - $140
HOA Fee - $2,160
Repairs - $800
Taxes - 1,336
Expenses + Vacancy = 41%
Net Income - $7,434/year
I look at financing rentals quite often. There's no perfect answer on expenses, but generally the lower gross rents a property generates, the higher that ratio. One of my clients loves section 8'rentals, but they come with 50-55% of gross being spent on operating expenses