All Forum Posts by: Rodney Kuhl

@Matthew Dovner That's most likely true that you wouldn't have as much maintenance/repairs each month for a rehabbed property as a distressed property. However, setting aside money for maintenance each month is more geared towards not only common repairs that could come up every month, but saving for bigger repairs down the road (roof, HVAC, etc). These won't come up every year, but eventually they will and it's good to have maintenance reserves set aside for them.

@Account Closed Thank you all for your insight and information!

@Shawn Holsapple I agree and will pay more if I find someone who can take care of what I need/want. I just didn't realize how much insurance costs for rental properties vs. a residence.

Question for you though, how can I possibly know if the property is going to be vacant for less than 30 days and I wouldn't need the builders insurance?? Obviously I hope to have a tenant in place before that, but can you ever be sure when buying the property of that?

The main expenses you will have are Property Management, Vacancy, Maintenance, Taxes, and Insurance. The 50% rule (which you can read a lot about here on BP!) is a guideline that says all of these expenses will equal 50% of the rent collected each month. You then add the mortgage payment onto those expenses to figure out your cash flow for the month.

You can read more about it by reading the Ultimate Beginner's Guide on this site (biggerpockets.com/ubg).

Welcome @Brad Crow !

@Franklin Romine Thanks, I will look into those. $300-500/year sounds great!

@Account Closed They raise the rates every year on each property?

@Shawn Holsapple Even if the property doesn't need any rehab, you still have to get the "builders risk" policy? What if I get a tenant in there in the first month, can I then switch over to the other policy right away and get the refund from the remaining time on the "builders risk" policy?

I'd like to have all of my insurance policies all to one broker, but I keep finding better individual rates for my home and auto on their own. If I could find someone that would be best for all of them I'd definitely want to do that.

@Account Closed Thanks for the response! I tried tacking it onto my personal home, but the quote from my insurance guy there was really high. So I've been shopping around a bit and gathering some quotes. I've reached out to local investors and gathered some names from them. I've contacted those agents and heard back from a few of them. Best quote I've seen for Replacement Cost policy is about $81/mo. Can I ask, who are you going through to get $600/yr ($50/mo)? And is that a Replacement Cost policy or Actual Cash Value policy? Obviously rates can change from where you are at in Illinois to Indianapolis, but figured it's worth a shot. Thanks again!

What type of policy do you all use for a rental property? Replacement cost or actual cash value? And why?

Also, how much do you pay monthly for insurance (I'm in Indiana)?

So how much does insurance usually run you for a rental property? If I'm looking at a property that is about $50K, what would you estimate as monthly insurance? Thanks in advance!

I would just calculate the cash-on-cash returns on a yearly basis based off the yearly cash flow. So, $1091/$1200, which is 9% like you said. I've never look at it the way you have, but I guess that could be the end result. I just don't think it's correct to say 30% per year as you wouldn't see that extra cash until the end. But yeah, that's the benefit of paying off the loan.

Thanks for this thread. I found a nice property in the same situation. Bank has it listed for $50K. I offered $38K as it needs a few updates, though mostly just flooring and paint. The response from the bank was that they couldn't go any lower than $50. It makes more sense why based off what @Wayne Brooks said.