Tax issues in Analysis

[Stephanie Bureau]

I can't get a property to cashflow in the calculator. I'm looking at rentals. I use the 10% repairs, 10% cap ex, 9% vacancy and 10% management. Taxes are about 2-4k/yr here and it throws off all of my calculations. I looked at a 69k house at 800-900 rent and a 100k house with 1000 rent and neither cash flowed. Am I doing something wrong?

[Rick Pozos]

This is why you have to purchase off market properties. Realtors are going to sell most of their properties at or near market price. You gotta find properties that are vacant, neglected, or their owners are in some sort of distress(BK, pre-foreclosure, back taxes, divorce, etc). 

• Gotta find properties that are below market price(above)
• Gotta put 10-25% down or more.
• If you do some rehab, you will not have 20%repairs and capital expenditures

Taxes are not the issue. Taxes are just an item that has to be paid out of rents along with a new refrigerator, stove, paint, etc. Determine what rents are, subtract expenses and what you need to make and that is YOUR price. Hopefully your price and the sellers price is the same or close, otherwise it is not a deal for you.