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What do you qualify as net operating income? I've been using the Property Analysis Tool and removed all of my property expenses - taxes, mortgage, insurance, water, advertising, and some other small expenses directly from the rental income profits. I don't really consider that "net operating income". But some people said to take out 45-50% for "net operating income" (out of the income profits) but didn't explain if that is what it is for (advertising, utilities, etc.).

So, what do you consider net operating income?

I definitely think it's innovative and potentially very rewarding. If it were available in my area and reasonably priced, I'd strongly consider it.

I've tried the 2% thing with the houses I'm looking at.. that's nearly twice the rent, and there is no way the properties would be able to rent that much. The 1.5% is a little closer. But at 1%, we're making money. I've been reading some good books about investing and they haven't mentioned the percentage. I'd recommend you go to Barnes and Noble or another book store and check out some retail estate investing books. Lots of great information out there.

Thanks Joshua!! I used that tool already. It was the one that showed me some pretty good numbers.

Thanks so much for the tool! Using it now.

LOL, my parrotlet, Lily, is my inspiration for my username. :D

Thanks Mike. That is the thing I need to know. I don't know how much to allott for advertising, maintenance, etc. etc. I've never done this before. Seeing as my company would manage the property, we wouldn't pay a management company, except for credit reports or collections.

If someone had an idea on how much these things cost on average... I'd have something to go by.

The owner of the property only pays water and the insurance (and taxes). All other utilities are paid by the renters. 2% of the purchase price would run $1800 per month, or $900 per month per unit. I know there is no way I'd be able to get that in any property.

Thanks again for the help Mike.

I included all of the numbers I have at the time. I'm planning on looking more into it, but I'm not exactly sure what maintenance or upkeep will cost, etc. Thanks for the info, though - I'll see what other numbers the realtor can give me and see how that affects it.

Thanks again

Any help is appreciated.

We will be making about $211 per month after all costs have been deducted. Is that a decent number, or do most people make more or less? I'm trying to decide if $211 a month is enough profit to justify.

Thanks

Hi all,

I'm new here and new to renting properties. I've been trying to research my area as much as possible, but I still think I need some help from the experienced.

There is a particular property, priced at $94,000 (I'd offer about 90,000) I'm interested in. It's a 2-unit, good area, and appears to be in pretty good condition. Gross income for the property is $11,700 or $975 per month. Expenses (water and insurance) run $1,420 per year (or $118 per month). The mortage is expected to be around $568 per month.

I read another post where a member said a formula of rent time one hundred is a good indicator. If that's the case, we're well within (975 x 100 = 97,500).

Based on those numbers, would you take up the property? It's in a fairly quiet residential area. (I also tried the analysis tool on the site, and the numbers looked good: gross multiplier at 7.69; cap rate at 10.39; net operating income at 9,348.00; debt coverage ratio of 1.44 at year 1; and pretty good equity).

I really appreciate the help and insight. I also apologize for asking already replied-to questions. You can also e-mail me.

Thank you!
Blake