Rental income effective tax rate

[Kyle M.]

Hi all- I am new to BiggerPockets here and investing in real estate. I am looking to get started using an FHA to purchase a 2-4 unit multi family property.

As I am running my numbers a few things I would like some insight/guidance on from the more experienced folks.

1. What is a good pre tax cash flow per door that I should aim for after moving out and having all units fully rented? I have heard Brandon and the other folks from the podcast say approximately $200 per door on the average rental. It is appearing difficult to get that with an FHA maybe because of the mortgage insurance and limited down payment?

2. In regard to the above noted cash flow, that is ultimately coming down from around a 1000-1300 per month gross rent per unit number in my region. If I’m only technically pocketing 200 per door, or even less, but I’m being taxed on the gross rent number above is that a good deal?

The main thing I’m trying to understand in question 2 here is how much of the after expense cash flow per door is eaten away by income taxes in the deals you have experienced?

Any other advice would be greatly appreciated! Thanks!

[Josh E.]

Hey Kyle, it's my understanding that most real estate investors pay close to $0 in income taxes due to write-offs and depreciation. As I build my business I am hoping to find a knowledgeable CPA to help me maximize write-offs and minimize payments to Uncle Sam