Buying on Rent to Own

[Lance H.]

If I were to buy a property on a rent to own, what expenses could I omit when figuring out what I could pay a month. I'm figuring I would not have to pay taxes, insurance, and capital expenditures. So instead of figuring 50% expenses, what could I figure my expense ratio would be?
Thanks,
Lance

[Michael Rossi]

Capital expenses are usually more like 5%. However, capital expenses aren't spent on a monthly basis. They are put into a capital expense account to be used when a capital expense item occurs. So, unless the owner is giving you this money each month or puts it into a capital reserve account or does a major capital expense project while you have the property, then you can't really deduct the capital expenses because you're not receiving them to build up your reserve.

Mike