$500+/month cash flow, per house

[Ian W.]

I've heard many people in Illinois / Chicago area talking about how they can still get $500/month cash flow on single-family houses. I'm not sure how they're running their numbers, but it seems difficult to even get 200/month. 

Am I running my numbers too conservatively? 

Purchase Price: Generally it seems good discounted properties can be bought for 100k, put 15-20k in and refi out for 150k. 

Down Payment: Being conservative with 25% down which will help the cash-flow. 

Property Taxes: Illinois is bad here. Very hard to find an investment property with under 3k/year on taxes. I've looked at all the supposed rental hot spots: Elgin, Streamwood, Homewood, South Side of Chicago, etc. South suburbs have the highest property taxes based on percentage. You can petition these down, but that'll only get you so far. And there's a fee if you use an attorney. 

Maintenance: Account for 1 month's rent per year, little under 10%. Going in the ghetto I'm sure 500/month is obtainable, but the maintenance number would have to be at least 3X normal rates. 

Monthly Rent: This is where Illinois wins out. The rents are rather high for the values of the properties. 1500/month is reasonable for a 3 bedroom. 

Vacancy: This can be anywhere from 5-10% depending on the area. I went on the high side. 

Management: I know once you get multiple properties you can negotiate lower than 10%, but to start that seems to be close to the going rate. 

And the results ...

Only $144/month per house. With as quickly as the property taxes are rising all around the state I wouldn't feel safe with that small of margin. 

Wondering how these people are getting the $500/month, unless they're just leaving a ton of equity in the house when they refinance to boost the cash-flow. 

Every one of Andrew Holmes' videos seems to talk about him or his students getting 5,6,700/month and they're based out of Illinois. Do they not account for maintenance? How would their numbers differ from the ones I presented here? 

[Eric M.]

@Ian W. Just a quick tip. It isn't the 1970's so you can probably give up using the word ghetto to refer to a poor, predominantly minority neighborhood. I especially recommend you don't say it when you are there.