On Average How Much Profit Per House
My sister & I own 10 houses in charlotte, nc and we get $250-$325 profit per month after mortgage/tax etc.
How is everyone else doing on that. What your avg?
We also decided last year to only buy homes no more than 5 years old, which has been no problem.
BTW: looks like its going to suck a bit getting our 11th.. w/ the 10 property rule thing.
I am asking how much people make minus mortgage, taxes etc. Not minus fix up expensivies, what you put in your pocket etc.
Roenee, if you are asking what people are getting for cashflow, that would have to minus the expenses that Chris mentioned.
I am in the break even category (or worse).
I am attempting to force appreciation via updates.
From a rental, I need to (and do) get a minimum of 1.5 times PITI (Principal, Interest, Taxes, and Insurance- in other words, the mortgage payment with escrows). But the only reason I can do this is because my investment is low since I purchase houses needing serious rehab. I refinance after the rehab, so this PITI cost is for 100% financing- I have none of my money invested. In real terms this means I cash flow over 10% of the rent on all my rental properties- although how you want to figure it I am cash flowing at least 50%.
It appears that in the current market, especially with these interest rate cuts, I will be doing better. But I need to get out of this overly nice house I am working on (too valuable for a rental) so I can refocus on the bottom ( in other words, rental) end of the market. Did just pick up an REO dirt cheap, but have no time for it...
Chris
I think the return need to be rolled up into an IIR, ROE, cash on cash, etc. number.
too many variables otherwise.
I think it is a viable model, but the key here is "cash flow". Does this mean the rent pays more than the PITI, or does it mean that after deducting 25% of the rent for expenses and paying the PITI there is actual cash flow? If it is the later then you have a marketing problem rather than a bad product.
Chris
Is that the rule of thumb you use Chris?
RENT - PITI & Maintenance (25% of rent of each unit) = CASHFLOW
Quote:
On 2008-02-08 18:24, ypochris wrote:
I think it is a viable model, but the key here is "cash flow". Does this mean the rent pays more than the PITI, or does it mean that after deducting 25% of the rent for expenses and paying the PITI there is actual cash flow? If it is the later then you have a marketing problem rather than a bad product.
Chris
THANK YOU CHRIS!!
OK, so the 25% is all other expenses besides PITI, correct?
This is VERY helpful information! I plan to use this formula in the future. [ Edited by d_random on Date 02/09/2008 ]
I need to start wholesaling again to pay off this stuff.... But there are a lot fewer people who want to rehab in this market...
I would check out if there is a way to fight the Sect. 8 Inspector. or get a realy good explaination.
You might even look on the HUD site to see if the publish the inspection standards[ Edited by cjmazur on Date 01/29/2008 ]
Good point, Chris.
In the last few years of double digit appreciation people frequently looked at repairs as part of the investment return rather than part of the cash flow equation.
The cows have come home and they cost to feed and water.
Jim
$8500 for sewer repair? $5000 for furnace? I must say, its a little expensive out east. New A/C /heat pump....maybe $2000 installed for a 1500 sf place.
I would shut the apt down and give the tenants their deposits back for a repair estimate over $5000. Chances are, the tenant is driving up the estimate cost. Only $750 a month rent here...cheaper to have it empty with all those problems.
good luck
I said $1500 furnace, not heat pump. My units are bottom end- nice bottom end, mind you, but if the tenants want AC they can put their own unit in the window...
Chris
duhhhh, yes im serious mattfish. very serious.
Obviously it depends upon how much you can get for a rental. But dropping $6000.00 on a repair ....any repair, is a serious consideration if im only collecting $8500 for the year.
In Louisiana, I can repair vacant property cheaper, maybe because contractors have easier access or maybe because more estimates can be made without the pressure of satisfying a tenant. Im not sure.
Pipes freeze?...maybe... but you would have to address that issue during any vacancy in January.
Sewer freeze? you got me on that one...never heard of it! Its a buried pipe my friend...at least 6 ft in Louisiana. I can assure you its below your frost line in the East and your plumber is ripping you off if u paid for a repair like that.
No tenant...or a tenant sueing you for hotel costs? hmmm...hell, you may not even collect rent that month.
But anyway, I would certainly consider leaving a property vacant if it needed significant repairs...so im serious...are you? $8500 for a sewer line...seems like you are the sucker...not me.
good luck
Good point, although I still wonder about $5k for a furnace when I have been quoted $1500-$1750 depending on size. But perhaps the furnace needs raised to meet new code, requiring replacement of the ducts or raising the floor or something- as you say, we have no idea what is involved.
Chris