Questions from a new investor..... :-/

[Carlos Quiros]

Hello All-

New to investing and had a few questions for those seasoned investors. My wife and I are looking at the mid-west to start investing (Ohio, Wisconsin, Indiana, Pennsylvania or Kentucky) My question are in the models I am running I am losing money on deals or barely breaking even.

For those of you that are already investing in these markets are there some your prefer over others?

What percentages are you seasoned investors assigning in your models for

• Insurance (I know that I can look this up but is there a baseline number to get an idea)
• Maintenance %age
• Repairs %age
• Cap ex %age
• Management Fees %age
• Who typically pays for (Gas, Electricity, Water, Sewage/garbage)

Should I avoid properties where I pay water as it would eat into my profits?

For those of you that are already investing in these markets are there some you prefer over others?

There’s so much to unfold and it’s definitely overwhelming but I thought I would ask those who have been in my shoes before. I know it’s a lot but it can be done since there are already so many successful investors here that show me all I need to do is keep going and ask questions.

Thank you in advance to anybody who takes time out of their already busy day to help a noobie

Carlos

[Travis Biziorek]

Hey Carlos,

I'm a bit north of you in the Central Coast and I invest heavily in Detroit.

In most markets it's difficult to find cash flow today if you're just plucking stuff from the MLS.

But in terms of your line items here is what I do...

Insurance I ballpark at $75/mo for a single-family house and $120/mo for a duplex. These numbers correlate well to my own portfolio as well as what I see other investors getting for theirs.

I glob maintenance/capex/vacancy into one line item and I assign 20% of gross rents. This is pretty conservative, especially considering most of our stuff we do off-market and then do an immediate cosmetic update. We update plumbing and electrical at this point if needed too. 

So I'm likely overestimating that line item but that's how I prefer to do it.

Management fee is generally 10% gross rents in my market.

Again, in Detroit all utilities are generally on the tenant. The outlier here is on multi-family stuff where there's usually just one water meter. So landlords generally cover that to keep things easy. That said, you can write something into the lease where you pay water up to a certain amount/month.

Happy to help more if I can. I know it can be super overwhelming!