How do you to figure cash flow profit from a rental property?

[Tony Marcelle]

I have an investor sending me properties everyday in my inbox. They are rentals with property manager and tenants already in place paying rent. One of the houses is selling for $25,000 that is rented at $650 per month. The investor said the only expense the buyer of this house pays is the closing costs. The property manager charges 10% of rental income. I am looking for a private lender. The renter pays taxes and utilities. I assume I take out whatever interest rate the private lender will charge from the rental income. Any other costs I need to be aware of?

[JD Martin]

Never heard of renters paying property taxes directly. Vacancy and repairs are only theoretical costs until they are realized but need to be factored in anyway - i.e., if the place never goes vacant there's no cost to you. This is rare, so most people will use some reasonable number to account for occasional loss of rent (5%-8-10% is pretty common). Repairs are a wild card and you will have to have some knowledge of what you are buying to get a rough idea. A fully rehabbed property will need less repairs than one last fixed 30 years ago. A new house will need less repairs than an old house.

Based on your questions, I think you are probably not ready to jump into the mix. You may try doing some more reading on here or checking out one of the webinars to learn a little more about owning rental property; figuring out your cost basis is pretty basic stuff, and you want to have that down pretty solid before you start spending money.