Account Closed, When we typically do our rent-to-owns (lease options), we still take care of repairs (in the sense of capital expenditures).

Cap-ex is short for capital expenditures which is bigger things that will need to be replaced over time like the roof, furnace, appliances.

I would suggest running your numbers again and make sure to account for capital expenditures because even on newly renovated homes something is bound to go wrong.

We are looking for cheap but not too cheap, maybe a maximum expenditure of $2.50 per square foot.  

Keep in mind your numbers aren't taking into account insurance, taxes, capital expenditures, or property management.

That way, you can at least have some input to how the money is spent and how or when the fees change..The way you need to look at a HOA, if it's done correctly, is as an enforced Maintenance and Capital Reserve expenditure, which are moneys you'd have spend one way or another anyway.

You should also be factoring in maintenance, capital expenditures, vacancy, applicable utilities, and typically property management.

@Cherrell Thomas cash flow is the profit that's left after debt service, property taxes, property management, common utilities (if any), reserves for repairs (small things like leaky faucets, AC servicing, etc), and capital expenditures or capEx (larger things like a new roof,new HVAC, major plumbing overhaul...these are treated differently on taxes, written off over a specified longer period) and other expenses.The first item I mentioned, debt service, is where the answer to your question is.

Vacancy - 8%, Repairs and Mait - 10%, Capital Expenditures - 8%, Mangement Fees - 10%Future Assumptions: Did not assume any appreciation over expenses, would be a nice plus but want the deal to be able to stand on its own without appreciation.Thanks!

The property has rented for the past 5 years with no vacancy and I make $200/ mo after all expenditures.