Rental Property Investor · Louisville KY · Member since 2013 · 84 posts · 11 votes
Ok BP'ers
I posted recently about the best way to analyze a portfolio of 7 properties (5 SFRs, 2 MFR). After further discussion with the owner, here are a few additional numbers for your review. These properties are in a rather rural neighborhood. The houses are old and from the looks of it, needs a little TLC.
Per the owner:
Asking Price $250,000
Rental Income $3600
Annual Maintenance $1100 (seems low)
Annual Insurance $1000
Annual Property Tax $2250.15
The properties are currently self-managed and rented. Tenants pay all utilities.
Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
10y
OK, I'm assuming on 7 properties, the rental income is 3600/month, and not annual. The annual maintenance is way too low. You should be expecting somewhere in the 5%-10% of the rental income as maintenance reserves, so this should be 180-360 (again per month, not year). The Annual insurance is probably per property, not the whole package. You should be able to look up the taxes on the county website or auditor's office where the properties are located, but this seems low too unless taxes are low. This could be for one property or the whole lot, so be careful.
Either the owner is clueless or trying to pull one over on you.
Either that is too high for an annual per location cost, or too low for the entire portfolio.
Liability insurance ranges from $75-$125 per unit when working on this size portfolio. So at $1,000, not sure if there is any property coverage.
That is a possibility on low value properties. But unless you are bringing 100% cash to the table, you will be forced to carry property insurance to back the loan. So you should factor that additional cost into your #'s if you are financing.
Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
10y
Yikes. 7 separate properties with ~9 doors and only $3600/m in income?! Cheapest rent I've ever seen. What kind of properties are we talking about here?