Need Expense Numbers for Durham
Hey Everyone,
I read J Scott's awesome article about deal analysis a few days ago on here, and I've been crunching numbers every since.
I'm hoping some locals could give me a better idea of what numbers and percentages I should be using to calculate expenses. Specifically What property tax rate should I use, what's the insurance going to be, and what's the typical vacancy rate around here? I've seen 10% being used as a benchmark for maintenance, is that what most investors use and is that 10% of monthly rent. I've been using a mortgage calculator I found online to calculate that? Are those accurate?
To put this into my context, I'm looking at homes in the 50-100k range.
Any feedback is greatly appreciated!
Hey Bryce check out this link: http://www.deptofnumbers.com/rent/north-carolina/durham/
It's somewhat dated but will give you an idea of the housing trend for rentals around here. For taxes, plan on ~.80 cents per $100 of assessed value. Call around about the insurance as it will vary but you should be able to get quotes over the phone in minutes. If you need referrals for that just PM me. As for the maintenance, I've seen some investors not budget at all (unwise) for it and others put aside as much as 40-50% of their monthly rent. Again, those numbers will be dependent upon numerous other factors.
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Real Estate Agent NC (#281288)
- Jobe Realty Group
@Michael Jobe great article. Thanks for the link. I can't believe Durham had such a high percentage of renters at around 40% for the last ten years. I knew there were a lot of rentals in the area but that's almost half of the population. It just makes me want to invest in rentals even more
@Bryce Jamison That numbers is only continuing to grow. As more and more people move into this area, the urban sprawl from Raleigh is spilling over into Durham. I've found that the majority of people who relocate here prefer to rent for at least a year before making a purchase.
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Real Estate Agent NC (#281288)
- Jobe Realty Group
Regarding "Specifically What property tax rate should I use..." The tax is on the property card. The algorithm is here: http://dconc.gov/government/departments-f-z/tax-administration/tax-rates and is based on county taxed assessed value. Capitalized costs depend on "system" condition and age. If the roof, siding, appliances, HVAC, water heater, etc. are all new, then "system" costs are lower. ID the systems and their age to calculate replacement costs and reserves...
Originally posted by @Michael Jobe:
Hey Bryce check out this link: http://www.deptofnumbers.com/rent/north-carolina/durham/
It's somewhat dated but will give you an idea of the housing trend for rentals around here. For taxes, plan on ~.80 cents per $100 of assessed value. Call around about the insurance as it will vary but you should be able to get quotes over the phone in minutes. If you need referrals for that just PM me. As for the maintenance, I've seen some investors not budget at all (unwise) for it and others put aside as much as 40-50% of their monthly rent. Again, those numbers will be dependent upon numerous other factors.
That is such an awesome website. Thank you Michael!
@Bryce Jamison , in your price range you are looking at older homes that need a higher maintenance budget. Nevertheless, 40% of rent is too high, 10 to 20% is more realistic. Anything above that will destroy the economics. The area has seen a price run-up in the last years and there is still a lot of cash chasing the investor market. It has become very difficult to find good deals. I think you can still find objects on the MLS that give you a 1% relation between monthly rent and purchase price if you are willing to invest a few thousand $ after the purchase. Obviously, the real deals are found off market. Have you checked into TREIA?
@Roy C. Not a problem glad to help!
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Real Estate Agent NC (#281288)
- Jobe Realty Group
Here's another question for everyone...
I keep hearing on the radio about no closing cost mortgages. I think it's Miller lending in Carey specifically. Is that just for refinancing?
If there really are no closing cost mortgages why would anyone pay them?
@Bryce Jamison yes miller lending does have a great lending platform. I have used them several times and they are awesome. You will pay a slightly higher interest rate for the loan (it's how they cover the costs), but yes very low to no closing costs on the loan. PM me and I'll put you in touch with my guy there.
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Real Estate Agent
- TII
Originally posted by @Bryce Jamison:
Here's another question for everyone...
I keep hearing on the radio about no closing cost mortgages. I think it's Miller lending in Carey specifically. Is that just for refinancing?
If there really are no closing cost mortgages why would anyone pay them?
Closing costs are rolled into the principal of the loan. They don't work for free.