Any other "rules of thumb"......

[Antonia K.]

Hi Everyone,

I apologize if this is a stupid question. I have been doing A LOT of reading and learning a lot. There is a property that has caught my eye and I was trying to take all things into consideration when crunching numbers, etc. I'm familiar with the 2% rule, 50% rule, CAP rate, etc. What I'm having problems with is thinking of all the items to take into consideration when calculating operating expense ie property taxes, repairs etc. Do I include insurance as well as that is calculated into the loan amount?

Are there any other rules of thumb I should take into consideration? I've crunched some numbers and took a stab at one of the calculators under the "Analyze" tab and the numbers are looking too good to be true. I keep feeling as though I'm missing something.

I appreciate any input!

[Jerry W.]

@Antonia K. I like your numbers on this property. I think a local bank would loan you money if you have decent credit. Using the 50% rule that half of your rent will cover taxes, insurance, management costs, vacancy, and other incidentals, you have a cash flow of over $200 per month on a$7,000 cash investment. You always need to get the actual numbers but it is definitely worth looking into more.

I would follow up on the inspection report issue. You need to actually investigate the neighborhood closely to make sure it is nice, check property condition for deferred maintenance issues, and comp the rents to make sure they are not temporarily inflated. if they are low your potential to increase cash flow would be great. Good luck