Cash Flow

does anyone have any guidance on what would be a reasonable amount of cash flow to expect from a 2-4 unit multi-family home. I am considering buying a rental home in syracuse with no more than 10% down. Is expecting cash flow of 175-200 / unit / month unreasonable?

Thanks.

Comments(6)

  • d_random3rd May, 2005

    Ray-

    How much cash flow would you shoot for on a 3BR/1BA single family?

  • fdoneit3rd May, 2005

    Yes, I mean after all expenses are paid - figuring in PITI and 20% of gross rent for management, maintenance and repairs. Is the liability coverage that is normally packaged with homeowners insurance (full replacement coverage) sufficient for rental properties?

  • ray_higdon3rd May, 2005

    D_random, I would want at least 150 for a SFR. Duplex would be 300, triplex - 450.

    Rmdane, I totally and completly agree, too many new investors do not know how to determine cashflow. 150 cashflow to me is after PITI, 5% repairs, 5% vacancy, advertising, legal, lawn maintenance, pest control, and supplies. Now, for those in other parts of the country, 5% vacancy may be too low.
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  • smithj23rd May, 2005

    I like the formula for calculating cash flow and have tried to use it on all the properties I try to acquire. However, I found that the only way I could get the formula to work on a property was if I made a large downpayment. I always try to get the maximum financing that I can get on a subject property and as a result, the formula does not work very well in my part of the country.

    How would you adjust your formula to account for downpayment? For example, If I only finance 60% of the purchase price, I am sure that I can make a $200 cash flow, but am I really in a better position than someone who finances 100% and makes a $25 cashflow?

    Just some thoughts on this concept of cashflow.

    JS.

  • d_random3rd May, 2005

    Thanks Ray! Good to know.


    Quote:
    On 2005-05-03 19:07, ray_higdon wrote:
    D_random, I would want at least 150 for a SFR. Duplex would be 300, triplex - 450.

    Rmdane, I totally and completly agree, too many new investors do not know how to determine cashflow. 150 cashflow to me is after PITI, 5% repairs, 5% vacancy, advertising, legal, lawn maintenance, pest control, and supplies. Now, for those in other parts of the country, 5% vacancy may be too low.


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  • cyberpete4th May, 2005

    I bought the house in Januray and the tenants were a hold over from the previouse owner. They are in fact not smokers but they always had a bunch of people over who smoked all the time. Thanks to everyone for you input.

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