I'm back and I have a few questions

Hey everyone, I have taken a little break from the boards, but I am back and I have a few simple questions that maybe you guys can answer.

I have made a spreadsheet and contacted several realtors giving them specific parameters that they must meet before they present me with properties and I have started to get a large amount of homes that match this criteria.

I also have made a spreadsheet that will automatically figure out if the home is cash flow positive or negative, I just want to make sure I have all the expenses listed and calculated. If possible can someone provide me with a full list of expenses that I should put in the spreadsheet? This way I can ask the realtor for a full list and exact prices on these expenses.

Thanks so much for your help ahead of time and once I get this spreadsheet finished I’d be more then willing to help others with it.

Hey jp

by the cashflow comment I assume you would be holding these?

Management fees
utilities (unless tennant pays)
mortgage
insurance
taxes
maintenance
vacancy

I’m sure there is more but these are some of the main ones. And keep in mind on the management fees, alot of people say “I’ll manage it myself” that is great but there are still costs that go with that, unless your time is not worth anything. Remember any time you spend “managing” that property is time you loose finding your next deal.

good luck
John

OK great, thats exactly what I am looking for…

what percentage should I factor in for maintance, vacancy, and property management?

JP,

Welcome back…

I use:

Maintenance: $50 per unit unless the building is old, then I’d use $65-70 a month

Manangement: Depends on what you can get in your area. Standard is around 10%. I can get management for 7% so that’s what I use. Call around. You’re in NY…it’s probably high - maybe even 12%…

Vacancy: Again, dependes on the area. Decent rentals go really quick her. I use 5%. That contemplates about 18 days a year of vacancy. A Realtor or a Management company (maybe the Chamber of Commerce) can give you a more specific rate. The norm is 10% – about 36 days of vacancy a year.

Keith

Thanks I am glad that this is somethign you can help me with.

I am going to update my spreadsheet and work with it, is there anything else you guys think I should make sure is covered in the spreadsheet before it is an accurate way to gauge all my expenses and incomes?

here are all the factors that I have so far that will effect me…

Home Price
Down Payment
Mortgage Amount
Taxes
Insurance
Payment

Rental income
gas
electric
landscape
repair
water
property management

Is this a different spreadsheet?

Keith

Nah same one that I talked about up to…just wanna make sure I get everything covered

When you give the percentages can you be more specific as to what they are percentages of? Which figure am I taking the percentage of in other words…The rent? The mortgage Payment by month/year, etc

JP,

The percentages you were given are based on gross rent. I agree with the percentages that Keith gave you with one clarification. The maintenance allowance of $50 is sufficient for regular maintenance, but you should know that this will not cover some of the big expenses that come up - such as a rental being destroyed by a tenant, cleanup when tenants leave but forget to take 60 cubic yards of their prized possessions, roof replacement, etc. In addition, you should allow something for legal expenses, lawsuits, evictions, setouts, government fines for tenant actions, etc. If you have rentals, sooner or later you’ll have these expenses.

Good Luck,

Mike

Yea i was always wondering that…so what percentage would you leave for legal expenses and how much would you leave on average for insurance…

I have almost completed this spreadsheet, now I want to build one that will allow me to input all this data and have it have a minimum income of 200 dollars a month after all expenses. I want it to basically give me a maximum # i can offer on the house in order to get that #

I have this one spreadsheet finished…if anyone wants to check it out and give criticism and see if its working give me your email address or email.

CCIM provides really good analysis spreadsheets for Lease/Sales analysis, 5 and 10 year. It’s meant for commercial use, but can be useful to residential projects. I have one that I created a while ago, but hadn’t used lately. I’ll probably update it based on some of the CCIM resources.

http://www.ccim.com/resources/library/busforms.html

Ok I’ll check out those forms, if someone who is good in Excel would like to review my spreadsheet to make sure all the factors are involved and if the math works out that would be really helpful. I want a quick and simple way to punch in MLS information and screen through homes…I also am looking for a way like I said for it to compute the maximum amount I can offer in order to make >$200 a month in income. If anyone can maybe check out my spreadsheet and see what they think that would be SO helpful to not only me but the whole board.

JP,

How did you come up with that $200 per month figure? $200 is a good number if your mortgage payment is $400 per month, but terrible if your mortgage payment is $1,000 per month. You’ve got to consider that also.

Mike

no 200 was a number that I was shooting for after all my expenses…