How much mark up over note payment, taxes, and insurance?

Rehabbing, Fix and Flip, Rental Properties
1

How much should one markup the rent abover the monthly taxes, insurance, and loan payment?

2

That’s not how rent is decided. Rent is decided based upon the regional market. Just because you pay $XXX in PITI doesn’t necessarily mean that you can charge $YYY in rent.

You need to work it the other way around. You need to know what the market rent is in an area and then find properties that will cashflow…

Keith

3

Gotcha… Thanks, I realize that. I guess I asked the wrong way. What kind of ROI (return on investment) do you look for after loan payment, maintanence, insurance and taxes?

4
What kind of ROI (return on investment) do you look for after loan payment, maintanence, insurance and taxes?

In_KY,

Loan payment, maintenance, insurance, and taxes are not even close to being all the expenses with rentals. Throughout the United States, operating expenses run 45% to 50% of the gross rents. Therefore, if you subtract the mortgage payment (P & I) from 1/2 of the gross rent, what’s left is your positive cash flow (or negative cash flow). I only buy a property if I can get $100 per month per unit positive cash flow.

Mike

5

Keep seeing positive cash flow of $100 as some people target. Is this a good number to shot for? I keep looking for deals that will pay me about 400 to 500 a month is this kind of cash flow too much to shot for. If so what type of positive cash flow should you, shot for.

6

<<I keep looking for deals that will pay me about 400 to 500 a month>>

Everyone looks for deals like that but they are as scarce as ‘hen’s teeth’! Right now here you can’t even break even…

Keith

7

orlandoterry,

$100 a month per unit, not per building. It’s not a good idea to look at profit per building as a criteria, look at per unit or per headache. The rent would probably never be $500 month positive even if you were given the property.

8

Thanks