Calculating rent needed

[Dave K.]

I am curious as to what goes in to rent. Silly question I know but I know mortgage, insurance, miscellaneous expenses. But can someone break down exactly what you MUST HAVE as far as if someone were trying to figure out the minimum rent needed to cover expenses? What are the expenses I guess is what I'm asking.

[Brett Russell]

@Dave K. , I think most people would suggest going the other direction. It doesn't matter what rent you need, you're only gonna get what someone (the market) will pay. So, figure out what a specific property in a specific area could/should rent for and then figure out if that would cover the expenses.

Expenses include property management, taxes, insurance, any owner-covered utilities (ie water, trash, maybe even gas or electric), a vacancy buffer and then some reserves for maintenance and capital expenditures. BP is a big proponent of saying that these expenses, over time, should average out to about 50% of rent, but it's good to figure them out as specifically as possible.

After paying those expenses, you have to cover debt service and anything left over is cash flow.