Originally posted by @Tim Herman:
@Scott Hawks way underestimating expenses. It costs almost as much in expenses for a $700er month rental as a $1000 per month rental. I like to use a minimum of $150 per month for repairs and capex. You are at $75. Look at floors in a capex budget. My area it is $6 sf to replace with a moderate lvp. Assume 1000 sf of flooring. 10 year life span. $6000/10 year life span/12 months in a year=$50 per month for 1 item. Still need to account for roof 25 year life span, appliances and hot water heater 12 year life span, hvac 20 year life span, bath and kitchen remodel 20 year life span, etc. You are using a vacancy factor 3%. That is the same as your tenant staying 33 1/3 months before a turnover. I use 8% or 1 turnover per month. You shouldn't have any expense for utilities. Pest control and garbage. Property taxes seem low< than 1% of purchase price.
@Tim Herman Can you explain your 8% turnover rate? So you are saying you budget for 1 month of vacancy per year per property?
Property taxes are low where i live (average 0.44% across the board), and i added an additional 15% on top of that as a buffer.
Some rehab has already been done (new flooring through out, bath remodel, partial kitchen remodel) and i've budgeted for new HVAC and water heater in my rehab budget up front.
I added garbage and pest control because those are expenses i pay for on all my rentals (pest control is required as part of the lease). Should i pass these expenses along to the tenant?
Here is an updated calculation based on some of your recommendations.
View report
