The lease terms are generally 5 yr leases with annual 3% increases and they usually request at least 4-5 5 yr option periods.

Regardless, if you have common area, you most likely need maintenance, if you have some expense responsibilities, you may need to have someone maiking sure they are handled.Mike made a point that you may not need management and that is true.

-vacancy rate-maintenance-utilities-property mgt-other-property tax-insurance

Absentee landlords and people who are in the home but can not keep up maintenance cause damage to the homes good citizens own.

According to some of the posts in this forum, I'm making a big mistake, but...Our HOA board has quit having meetings, quit doing maintenance on commons, quit taking care of the grounds, and can't tell me how they have or will spend the money.

If you were to buy this house cash, it would be returning about 21% annually without taking expenses, vacancy, etc. into consideration.

It offers easy set-up, low maintenance, low costs, pass through accounting, liability protection (one way), and much more.

If you are referring to capital expense reserves, you want anywhere from 5%-10% of the gross annual income as a reserve fund, depending on the age, location, etc. of the units you are buying.As far as building this reserve initially, one option Mike did not mention is to have the purchase contract stipulate a deferred maintenance credit from the seller to you.

Having a financial partner to put up 100% of all the acquisition, repairs, maintenance, reserves, and financial risk is a great asset for you.

You'll have extra maintenance and a lot of vacancies due to summers and drop outs.