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Old 06-24-2013, 06:25 PM   #21
Recycles dryer sheets
chasesfish's Avatar
Join Date: Feb 2013
Location: Marietta, GA
Posts: 124
Originally Posted by Fishingmn View Post

30% is low in my opinion.

If you spend any time on (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

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