My Business Model

I am brand new to this ****Must Reach Senior Investor status before posting URL's*** think that I am being over simplistic as it concerns my business model. I am looking at three Multi-Family Properties(I will use a blanket mortgage scenario).The only monthly expenses I come up with are as follows:

Mortgage
Property Taxes
Insurance
Utilities(I am debating paying these)
Property Management
Maintenance

I am missing something?How does depreciation fit into my business model?What kind of Income tax am I looking at paying?Any help is much appreciated!

Comments(3)

  • TBarber3rd October, 2003

    As far as expenses go you should consider vacancy as a fixed cost or at leat as a deduction off of expected gross income.
    Also think beyond maintenance. Do you have to have snow shoveled, lawn mowed, garabge dumpster, or any other unforeseen costs that fall out of normal maintenance costs.
    Also many investors add management as a cost when figuring potential cash flow incase they decide to outsource management now or in the future.
    Have you figured in insurrance costs?
    If possible you should ask to see the owners schedule E of his tax return to see what he claims as expenses. Some people don't want to show you it but if they are serious enough they will.
    You should discuss taxes with an accountant

    TBARBER

  • fap3rd October, 2003

    I have a CashFolw analsys Sheet

    Located at

    http://www.lipsit.com/hsh/docs/CashFlowAnalysis.xls

  • DaveT20th October, 2003

    fap,

    I looked at your spreadsheet. I believe you have an error in your CapRate formula. I suggest it should be

    =(E34/SUM(B38:B39))

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