Sacramento, CA · Member since 2016 · 8 posts · 1 vote
$800000 price, 20% down. rent is 4250 and could be raised to 5200 minimum. All 2/1 units. 2beds are going from 1200-1500 per month in the area. These 4 are at 800, 1075, 1125 and 1250. Recently renovated, so no renovation costs. All estimates, but with a 3% loan, 8% vacancy, 5% repairs, 9% management, taxes, insurance, etc. At $4250 per month I'm looking at about $105 cash flow per month. With the extra rent raise it would be added on, minus the management fees.
Anything else I might be missing? This would be my second rental purchase, but first one in my local market. I would also need a partner to get the full down payment.
Rental Property Investor · Bay Area, CA · Member since 2018 · 64 posts · 39 votes
5y
I would also factor in a capex fund for major repairs. Who pays utilities? I suggest trying the BP Rental Property calculator to get a better assessment, but it looks like a thin deal to me and I would likely pass.
Rent control will prohibit you from getting to market rents unless you turn over the tenants. Otherwise it would take you years of the limited incremental rent increases (5% + inflation). Once they are turned over, there will likely be non-trivial turnover costs.
Also consider how much money you will have deployed for that $105 cash flow (per unit?).
Sacramento, CA · Member since 2016 · 8 posts · 1 vote
5y
@Daniel Zapata thanks for the input. I used the calculator and got those costs. I don’t think there is rent control in Sac, but I would have to find out. Depends on if prop 21 passes on Election Day too.