Also, capital expenditures made after the property is put into service increase your basis.

Depending on the age of the property and deferred maintenance you might be looking at way more than 10k on just the interior.With you at 10k for repair, 3 months lost rent, closing costs and due diligence you are close to 20k expenditures already.

First and foremost I pay all mortgages, taxes and insurance and then any repairs and or maintenance that may be needed next.I then take what is left and split it in half, investing half in the stock market (usually dollar cost averaging into some mutual funds and stocks I like, and the other half goes towards cash reserves for capital expenditures and or savings for another investment.I like to invest a fair part of my rental income into the stock market to diversify and hold hard assets as well as securities that pay dividends to create additional passive income.I am very disciplined have have stuck to this system for about 8 years now andf have created a decent amount of passive income via dicidend paying invesstments as well.Chris

Jon, happy to clarify...so far my plan looks like this:Looking to start by picking up a small multi-family, in order to spread expenditure costs and vacancy hits as opposed to the single-family approach.

@J Scott - was counting on the 4k per year maintenance line item to cover capital expenditures over time.

@Steven Hamilton II - given the nature of lead abatement, it could be considered an improvement rather than a repair, and as such the net expenditure would be depreciable rather than deductible.

Or NOI could be understated due to capital expenditures being reported as operating expenses.

Here's what I discovered: Assuming a $200,000 purchase price with 20% down, 8% for vacancy, 10% for repairs/maintenance, 5% for capital expenditures (reserves for future big things) and 12% for property management (even if you plan to manage yourself, I always advise including this expense, because someday you'll be so big you can't manage yourself, and if you can't afford a PM today, it's not an investment you are buying, it's a job) this is what I discovered (it's not good) (If you can't read this, download the PDF here) Here are my thoughts. 1.)

You can deduct the expense, yes, but that is hardly, IMO, a "phenomenal advantage" as mentioned above ;) at least if you compare it to having an employer cover half of the expense or more.I have never had a job with benefits, and health insurance remains my single largest monthly expenditure.

I'm not going to send a check to a treasurer whose term expired and may not even own a unit anymore, without some idea of where the money is going and how it will be used.The commons areas need attention, but even if I got on the board and straightened things out, I doubt very seriously that I could get a majority agreement from the rest of the owners to make any major expenditures.