What's your average net income per rental property?
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3yHard to tell, but for small multi family in Milwaukee $200 per door is kind of an average number. This includes debt service and actual expenses. My portfolio is mostly higher price points per unit, so more capital invested and I'd like to see at least $500 when we put them in service. Over time these numbers tend to increase.
At $200 a door it takes a lot of units to make some money, which illustrates the importance of principal pay down, equity and appreciation when it comes to wealth generations. Some people never get there, here is a story.
I run a lunch and learn series at our local association and one of my topics every year is: how to make a million with rental properties. It's a math exercise and you can use a BP calculator. Starting out with a normal W2 you can conservatively make a million in about 7-8 years, no more than 10. Most of that will be equity, not cash flow. After running everyone through the exercise I asked for questions and an older guy raised his hand and said he has been doing this for 25 years and has 30 doors and is no where near a million.
Turns out he had accumulated a portfolio of duplexes in low income areas, has always done all the work by himself and is pretty much spending all of his cash flow and capex and repairs. The properties are not worth much, but they are old, so they require substantial capex. He had no significant principal pay down, a lot of the properties were bough cash. And very little appreciation, they were 50k then, they are 50k now.
Bottom line, cash flow is vitally important to keep your operation going, but it is not how you generate wealth in real estate. You need a a holistic view and IMO it's best to find a balance between cash flow and equity generation.
92 Replies
- Member since 2018 · 8 posts · 1 vote3y
Upstate NY with around 100 units. Mostly B class small MF.
I average $175 unit/monthly
My operating expenses run 65% (older building, more maintenance). I like to keep my debt service around 20% and reserves around 5% so I pocket 10% ish
That said I work full time as the property manager and I also one of three maintenance guys so I also take a paycheck for my “day job”. Which included in the operating expenses - 3yTim BeeInvestor · CA · Member since 2023 · 196 posts · 107 votesOP
Quote from @Michael Giuffre:
Approx. $12k/mo. Total principal and interest payments, of which principal accumulation is about $3.5K/mo. Which I consider to be extra “forced” savings on top of the rental free cash flow of $16k/mo.Quote from @Tim Bee:
Nice, so 28K net profit per month. How much is the monthly loan payment if you don't mind?Quote from @Michael Giuffre:
Average NOI per door (before mortgage) is currently $710+/mo. across roughly 40 units.
Not bad! Sounds like you got a really great deal.
- 3yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Tim Bee what information are you trying to get with this question?
Many of the answers won't be of use to a newbie, due to:
1) Property location, which will affect gross rent amounts.
There's a HUGE difference in average rents between California & Mississippi properties!2) Property Class, which will also affect gross rent amounts.
For a specific location, Class A properties will have higher gross rents than Class B, which will have higher gross rents than Class C and so on.3) How long a property has been owned, which will affect rent - PITI
A property owned for 5+ years will have benefitted from rising rents, while the PITI payment has changed little.You may be trying to find a number to use in projecting how many properties you need to replace your W-2 income. There's really no guaranteed formula to do this.
Logical Property Management4.9458 Reviews - 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
It's great that so many real estate investors are able to use the market as a way to write off expenses and offset income. However, for those of us who don't have a ton of capital on hand, it can be tricky to make an investment with just 20% down or less. Real estate investments at such thin profit margins often require careful budgeting and attention in order to turn it into a long-term income stream. Anything under $500/mo after debt service + management is not usually worth the time because there are too many potential losses due to unexpected maintenance or other factors. However, when done right, investing in real estate with minimal capital can lead to big rewards!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
Quote from @Will Conner:
@Marcus Auerbach
Is this L&L available online, by chance?
No only for members of the AASEW so far, but we will change that going forward. But you can recreate this specific exercise with the BP calculator
- Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes3yJust under $1000 per month per property net.
Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
- Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes3y
@Tim Bee it would be interesting the answers based on when the investor purchased the property because those that have had them for 5-10 years should be a higher number than those that purchased posted 2020.
- Investor · Central Virginia · Member since 2020 · 393 posts · 253 votes3yThis is absolutely true! Time is the compounding factor in income. 5 years ago I bought a home to live in and turn into a rental and now the income is double the mortgage, income keeps increasing while costs remain relatively fixed.
Quote from @Lucia Rushton:
@Tim Bee it would be interesting the answers based on when the investor purchased the property because those that have had them for 5-10 years should be a higher number than those that purchased posted 2020.
- Realtor · Owensboro, KY · Member since 2018 · 33 posts · 22 votes3y
@Tim Bee mine were bought 2-3 years ago. I’m at 200-300 cash flow each door that’s with piti all escrowed into mortgage
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
- Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes3yI understand the difference between net and gros
Quote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation. - Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes3y
Quote from @Chris Webb:
This is absolutely true! Time is the compounding factor in income. 5 years ago I bought a home to live in and turn into a rental and now the income is double the mortgage, income keeps increasing while costs remain relatively fixed.Quote from @Lucia Rushton:
@Tim Bee it would be interesting the answers based on when the investor purchased the property because those that have had them for 5-10 years should be a higher number than those that purchased posted 2020.
Exactly. I had several singles that would true net cf $1200/mo.
But btw, these were the result of 1031 exchanging twice each over 12 years and had no debt.
Also have a house I put on a 6yr payoff. Cf is break even but it pays down $700/mo and is 90% equity. CF itself has too many variables to be a reliable return metric overall.
- Rental Property Investor · Dallas, TX · Member since 2020 · 161 posts · 88 votes3y
@Tim Bee, my average net income per house is about $1000 per month.
- Rental Property Investor · Dallas, TX · Member since 2020 · 161 posts · 88 votes3y
@Tim Bee, I net about $1000 per house per month (class B+, 3/2/2 brick SFH). No mortgage, average value of $380,000.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Curtis Mears:
I understand the difference between net and grosQuote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation.What's your take home?
Rent less PITI, vacancy, capex, property management on any one of your properties? It's not $1000 clearly, we can work around the words however we want. Numbers will make it more transparent.
- Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes3y
Quote from @V.G Jason:
Quote from @Curtis Mears:
I understand the difference between net and grosQuote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation.What's your take home?
Rent less PITI, vacancy, capex, property management on any one of your properties? It's not $1000 clearly, we can work around the words however we want. Numbers will make it more transparenis English not your 1st language? I take home just under 1000 per unit per month. Why can you not understand this?
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Curtis Mears:
Quote from @V.G Jason:
Quote from @Curtis Mears:
I understand the difference between net and grosQuote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation.What's your take home?
Rent less PITI, vacancy, capex, property management on any one of your properties? It's not $1000 clearly, we can work around the words however we want. Numbers will make it more transparenis English not your 1st language? I take home just under 1000 per unit per month. Why can you not understand this?
Learn how to quote properly before you talk back.
I asked you for your math, you still haven't provided it properly. English is my first language, perhaps it's not yours and math definitely isn't your strong suit. You showed this:
Gross Rent $18,210 (increased to $20k for 2022 due to rapid rent increases in 2021 and 2022)
Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916
Indirect Expenses (Telephone, Travel, prof fees, etc) $351
Net Income (Rent-Direct-indirect) $10,944
And I replied to you, asking do you not take into account capex, vacancy, and debt? Do you have no mortgage payment, is this all cash?
Then, you decided to reply to my first post again with the same response--saying it's net. I'm asking for the math, do you not understand?
You still haven't responded, perhaps you should read a bit before you talk ****. You're dumb with math or your basic comprehension skills are below a 4th graders. I'm starting to think it's both. Go ahead and bow out of this thread, I'm pretty confident once we run the numbers your net is coming less than 40% of your claim.
- Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes3y
Quote from @V.G Jason:
Quote from @Curtis Mears:
Quote from @V.G Jason:
Quote from @Curtis Mears:
I understand the difference between net and grosQuote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation.What's your take home?
Rent less PITI, vacancy, capex, property management on any one of your properties? It's not $1000 clearly, we can work around the words however we want. Numbers will make it more transparenis English not your 1st language? I take home just under 1000 per unit per month. Why can you not understand this?
Learn how to quote properly before you talk back.
I asked you for your math, you still haven't provided it properly. English is my first language, perhaps it's not yours and math definitely isn't your strong suit. You showed this:
Gross Rent $18,210 (increased to $20k for 2022 due to rapid rent increases in 2021 and 2022)
Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916
Indirect Expenses (Telephone, Travel, prof fees, etc) $351
Net Income (Rent-Direct-indirect) $10,944
And I replied to you, asking do you not take into account capex, vacancy, and debt? Do you have no mortgage payment, is this all cash?
Then, you decided to reply to my first post again with the same response--saying it's net. I'm asking for the math, do you not understand?
You still haven't responded, perhaps you should read a bit before you talk ****. You're dumb with math or your basic comprehension skills are below a 4th graders. I'm starting to think it's both. Go ahead and bow out of this thread, I'm pretty confident once we run the numbers your net is coming less than 40% of your claim.
VG now I understand. You do not understand what I am saying because you do not own rental properties, but you have read some books on the subject and know the terms. The vacancies are not a separate line item, as these are historical numbers. Vacancies would be reflected in lower gross rents, not separate line item. As for cap ex, I include them in the Direct expense line item. PITI is also included in my direct expense line item as I already noted. As for debt, I did not address debt as that was never in the original post.
Maybe you could help me out and let my accountant know I make far less than what he keeps telling me. I would appreciate that.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Curtis Mears:
Quote from @V.G Jason:
Quote from @Curtis Mears:
Quote from @V.G Jason:
Quote from @Curtis Mears:
I understand the difference between net and grosQuote from @V.G Jason:
Quote from @Curtis Mears:
Just under $1000 per month per property net.Quote from @V.G Jason:
Quote from @Curtis Mears:
@Curtis Mears
Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.
So over $1k a month, that's net or gross?
gross is 1k. You're net is after piti, capex, vacancy, operations. Where does that sit? Probably closer to 200-400.
s. My average net is just under $1,000 per property per month. The only additional expense would be noncash item depreciation.What's your take home?
Rent less PITI, vacancy, capex, property management on any one of your properties? It's not $1000 clearly, we can work around the words however we want. Numbers will make it more transparenis English not your 1st language? I take home just under 1000 per unit per month. Why can you not understand this?
Learn how to quote properly before you talk back.
I asked you for your math, you still haven't provided it properly. English is my first language, perhaps it's not yours and math definitely isn't your strong suit. You showed this:
Gross Rent $18,210 (increased to $20k for 2022 due to rapid rent increases in 2021 and 2022)
Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916
Indirect Expenses (Telephone, Travel, prof fees, etc) $351
Net Income (Rent-Direct-indirect) $10,944
And I replied to you, asking do you not take into account capex, vacancy, and debt? Do you have no mortgage payment, is this all cash?
Then, you decided to reply to my first post again with the same response--saying it's net. I'm asking for the math, do you not understand?
You still haven't responded, perhaps you should read a bit before you talk ****. You're dumb with math or your basic comprehension skills are below a 4th graders. I'm starting to think it's both. Go ahead and bow out of this thread, I'm pretty confident once we run the numbers your net is coming less than 40% of your claim.
VG now I understand. You do not understand what I am saying because you do not own rental properties, but you have read some books on the subject and know the terms. The vacancies are not a separate line item, as these are historical numbers. Vacancies would be reflected in lower gross rents, not separate line item. As for cap ex, I include them in the Direct expense line item. PITI is also included in my direct expense line item as I already noted. As for debt, I did not address debt as that was never in the original post.
Maybe you could help me out and let my accountant know I make far less than what he keeps telling me. I would appreciate that.
Glad you understand, you're right I have yet to own a rental property but I own over double digit small businesses, so I'm pretty sure I'm a bit more developed financially than you are. I'd put vacancies in a tab, not so much cause a book said so but because it's a material cost if you're buying unoccupied and as you turnover tenants. Do you mind sharing how many tenants have turned over in any of our places, and what was the cost to keep whole during that transition? Pretty confident if it's an average amount, you have been again miscalculating. But then again, your math is trash so that's expected.
And you didn't mention PITI in it's entirety, you just mentioned insurance & taxes, where's the principal and interest in your direct expenses? You literally wrote:
Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916
Care to clarify where P&I stand? And no you didn't mention debt, but I asked as I was trying to understand how net would be classified with those disregarded. Glad your accountant can justify your financial situation, unfortunately he can't help how inept you are at almost everything else. And no, I won't like to help you out in that.For the sake of the thread, you don't make $1,000 net per month. So people that are evaluating... aren't getting confused.
- Rental Property Investor · Wake Forest, NC · Member since 2017 · 128 posts · 131 votes3y
@V.G Jason sure thing! Self managing and leveraging strong systems helps. One of my properties on the NC coast -
Purchase Price: 640k
Monthly mortgage, insurance, taxes - 3600/month or 43k/year. Pay cleaners ~12k in 2022. Subscriptions, software ~2k/year. 5% CapEx and 2.5% - I know the % look small, but our gross revenue is high - CapEx = 6k, maintenance 3k (we also renovate our properties upon purchase so maintenance and CapEx need is not as high). Flood insurance - $2500/year. Restocking and furniture upkeep - $2500/year.
All in ~70-75k. Now, that’s with the disclaimer that we invest more into renovating and staging the property - ensuring that we stand out from the competition and also keep our monthly expenses low.
We grossed $115k in 2022 from this property.
I think my encouragement with this is to go outside of your local market, don’t be limited to the places you’re immediately familiar. I’m not operating in any market that’s over saturated or doesn’t have a long history of a strong rental market. Also, even with the recent decrease in property values, or the slowing of appreciation, this property still just appraised for 800k at the end of 2022.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Grayson Spittel:
@V.G Jason sure thing! Self managing and leveraging strong systems helps. One of my properties on the NC coast -
Purchase Price: 640k
Monthly mortgage, insurance, taxes - 3600/month or 43k/year. Pay cleaners ~12k in 2022. Subscriptions, software ~2k/year. 5% CapEx and 2.5% - I know the % look small, but our gross revenue is high - CapEx = 6k, maintenance 3k (we also renovate our properties upon purchase so maintenance and CapEx need is not as high). Flood insurance - $2500/year. Restocking and furniture upkeep - $2500/year.
All in ~70-75k. Now, that’s with the disclaimer that we invest more into renovating and staging the property - ensuring that we stand out from the competition and also keep our monthly expenses low.
We grossed $115k in 2022 from this property.
I think my encouragement with this is to go outside of your local market, don’t be limited to the places you’re immediately familiar. I’m not operating in any market that’s over saturated or doesn’t have a long history of a strong rental market. Also, even with the recent decrease in property values, or the slowing of appreciation, this property still just appraised for 800k at the end of 2022.
Incredible, great job. I hope the occupancy stays high and the regulations don't change, those are your only downsides. If you're standing out among the competition, the former does not appear to be an issue though. So well done. - Lender · Rosenberg, TX · Member since 2022 · 286 posts · 130 votes3y
@Tim Bee This is 100% loaded question that is unfair to compare on $ alone. Each location/ market is going to have different costs. You need to focus on what % makes sense for you.
You need to focus more on your Debt Service Coverage Ration DSCR and your Net Operating Income NOI.
I have junior investors weekly bring me deals where they are all excited that the cash flow is $10-20K per month, but they are no looking at Expenses, Increase in tax value( very huge increases in some markets right now) Not factoring Vacancy and the final % of profit.
Looks like you are on the right track focusing on NOI. Any other questions just ask.
- Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes3y
For me it's a minimum of $500, but I'll consider $450+. Anything less than this in my opinion is not going to work out as a positive investment. Investments are organic living breathing things - tenants don't pay, things break, vacancy, etc.... So if you are breaking even, most likely you are losing money. This is for my single unit townhouse/rowhouses
I love triplex's and have several - for these I like to net around $1,500 total.
The only time I would being willing to break even or maybe even lose a little is if I'm banking on appreciation. For example, if I can buy a house in San Diego for $800,000 break even on rent for 5 years and anticipate it to be worth $1.4 in the future, maybe I would consider this but most likely this is not going to happen.
- Member since 2021 · 20 posts · 2 votes3y
@Bob Stevens Hello. Im intrigued to know a bit more about your portfolio. Where are you investing where your property is under $75K and renting for $1K. I have about $75K saved up and want to start investing and would love to hear your thoughts.
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