I was just running numbers for properties in my area (central NC) but was just wondering what a good baseline number or percent of the property’s gross income just for the purpose of determining whether I should look closer at a particular property. Is 33% good or am I off base? Any help would be appreciated…
Hey, read this
http://www.reiclub.com/forums/index.php?board=32;action=display;threadid=15604
Read the last post on the thread
Mike (propertymanager) posts these numbers once in a while. I don’t know them to be accurate, but it makes sense to me to be more careful instead of less until you are actually looking at the hard numbers of expenses.
DB
I would use 40-50%.
OK…that checks. Are annual taxes included in that figure or do I need to calculate for that as well?..
The taxes would be in those numbers. Something that might help is to get on loopnet.com and search for the properties that interest you. Then just take about 20 of them and work through the numbers. Figure out the income and expenses, NOI and Cap rate, and then see if the asking price is maybe a good deal. It is basically just homework. You will start to feel comfortable with understanding the numbers.
DB
Thats exactly what I am doing actually. The numbers were just coming out way off. Thanks a bunch for the help/clarification all!
Griff