Hey Ryan, thanks for the mention and including me in this conversation. DJ, I own a two family in Winsted, CT and a three family in Torrington, CT and both have been great. I also was born and raised in Winsted, CT and lived there for the first 27 years of my life, and also still have a lot of family in that area. When I was trying to fill the apartments, there was plenty of interest and in the case of the Torrington property, there was so much interest that we had to hold an open house because we couldn't manage all the requests for showings.
Like @Ryan Deasy stated, those metrics aren't necessarily the end all, be all. For instance, the three family property is almost entirely paid for (Principal, Interest, Taxes, Insurance) by the first floor rental income, the second floor rental income I throw into an account that is only used for regular maintenance issues, capital expenditures, vacancy, eviction, etc (approx. 800 dollars a month), and the third unit income I have been saving to put towards the next property. After everything, this property is still kicking off close to 300.00 per door. This is the very quick and basic way that I analyze a property to pass the "smell test" to even begin considering it a viable property.
The Winsted property is very similar in that the first floor rental income more than pays for the entire monthly payment (PITI) while the second floor rental income is put into an account that will be used only for the regular maintenace, capex, etc that I mentioned before. After each house has enough money stored away for the rainy day fund, I will start paying myself and using that money towards other properties. I think a safe amount to have in the account is around 12%-15% of the value of the property.
Now I know this is not the same approach that many investors use when they consider all these different percentages for vacancy, capex, etc., but I have found that its a very quick and easy way to analyze a property to even make sure that I am interested in it, especially for the 2-4 unit properties. I actually end of up putting more money away per month than I would if I had used the percentages that you outlined above.
I think the key is buying right and making sure that you're not overpaying for a property, especially if you plan on using the BRRRR strategy. Its always better to pass on deal that seems like there's not enough meat on the bone rather than buying wrong and burying yourself, especially at the beginning.
Let me know if you want any help searching for properties in that area that would fit your criteria and I'd be happy to help.
