When $100 a door becomes a risky proposition

[Marcus Johnson]

It seems as though a lot of BP investors strive for $100 cash flow per door.   I personally don't see how the math works over the long haul.   Fact is an unexpected repair such as a flooding of a basement, a tree falls down after a storm and you need to pay someone to haul it away and taxes go up due to appreciation.   Here is a real situation that is happening to my duplex investment and many others across the country.  Because the housing market is exploding all over the country, property taxes are going up along with inflation.  Houses in South Minneapolis for example have appreciated 22% to 35%.   So this means the city and county are able to raise taxes.   Mine jumped $1,100 in one year.  This is completely justified by the city because of the value of my duplex.  The problem is that now I owe $91.00 more on taxes, which takes my $860.00 monthly cash flow down to $769.00.   Imagine if your duplex or other multi-plex is hoping for that $100 a door and suddenly your taxes are costing you an extra $91.00 a month.  That leaves you with almost nothing for cash flow.  So I personally don't think that number ($100 a door) is a wise figure.  

[Mike Dymski]

Profit in real estate comes from (1) cash flow (2) equity accumulation and (3) property appreciation. Talking about one without the others is not meaningful (not to mention financing differences). $100/door on one property can have a dramatically different IRR than $100/door on another property.

@Linda S. the $100/door figure that investors use includes those $350 service calls...it's after all vacancy, expenses, cap ex reserves, etc.