This eats right in to your profit (not as much as not having the time to properly manage the place will though!).  

That can eat up way too much capital.Good luck.Brian

It normally works out to them eating 4 months worth of rent.

But what I thought they said is to figure out the cash flow and then divide it by two because history has tended to show that unexpected expenses (new water heater in yr 1, roof repair yr 2, etc) tend to eat up about half of your earned cash flow.  

@Kyle CarpenterYou would have to self manage this as a property mgr would eat all the profit.  

Second there are ongoing expenses, fees and dues that will quickly eat up the profit from a hand full of deals.

You can easily make a few hundred in a weekend.Find a part-time job doing handyman stuff for other investors ($25+ an hour)Go through stuff you own and sell it on CraigslistDrive for UberTaskRabbitMow some lawnsGet a higher paying full-time jobIf you are wanting to make this real estate thing your life, you need to eat, sleep and breath it.  

It came down to, do I overpay for a property by $40k, or eat the $30k in taxes.  

The condo we are scouting does allow rentals.The HOA fees have been something we  totally don't like as they eat into your returns.  

However the property taxes are expensive and eat into a lot of the cash Flow, any other investors who deal with this have ideas?