Rental Property Investor · Member since 2018 · 16 posts · 0 votes
Hi BP I am new to real estate investing. I just recently purchase a 2 family unit. I really don't understand how to figure out the numbers. When I use one of those analyzing calculators it's showing me I will be in the hole $143 a month. But I own the property 16 months now and I feel like I am making money so I don't understand what I'm doing wrong.. when I do my calculations for example. I'm coming up with a profit of over $500 I'm planning to purchase another rental property but I need to make sure I'm understanding this right
Example purchase property for $131,000
Put about $4,700 down mortgage with taxes insurance and garbage is $1060
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Damaso Bautista
I put away 35% to me that's kind of enough for Rehab maintenance fees or vacant. When I bought the property it was in very good condition. I'm not sure what the four square method is I'm going to look it up
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Ali Boone
But my question was taking away 35% for maintenance or any rehab in the future or any other miscellaneous stuff is that a good amount. The place I bought is 2 units two bedrooms and each apartment good condition one rent for $1030 the other one rents for $945 the second floor unit basically covers the whole mortgage. My mortgage includes the taxes insurance and garbage. The tenants pay or electricity water and heat theirselves
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Damaso Bautista
Pennsylvani. But my question was taking away 35% for maintenance or any rehab in the future or any other miscellaneous stuff is that a good amount. The place I bought is 2 units two bedrooms and each apartment good condition one rent for $1030 the other one rents for $945 the second floor unit basically covers the whole mortgage. My mortgage includes the taxes insurance and garbage. The tenants pay or electricity water and heat theirselves
Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
7y
In a simple sense, start with this formula.
(Gross Income minus what % you are taking out for Vacancy)=Effective Gross Income
Take your effective then minus out your expenses as a landlord such as what utilities you pay, maintenance, reserves, taxes etc=Your Net operating income, your NOI. This is the money your property is producing.
Take your NOI then minus out your debt service aka your mortgage payments and that is going to give you your cash flow. Do this on an annual basis. This is what you are taking home.
Make sure you do not double deduct your taxes and insurance.
But my question was taking away 35% for maintenance or any rehab in the future or any other miscellaneous stuff is that a good amount. The place I bought is 2 units two bedrooms and each apartment good condition one rent for $1030 the other one rents for $945 the second floor unit basically covers the whole mortgage. My mortgage includes the taxes insurance and garbage. The tenants pay or electricity water and heat theirselves
Well then why is the BP calculator showing you in the hole? Seems like you're not only profiting on paper, but you're profiting in real life too. So what's the conundrum?
I need to be looking for properties in whatever town that is in!
(how in the world does garbage get included in a mortgage?)
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Ali Boone
The calculator was confusing me because it had me add my mortgage and then have me add taxes and insurance but that all is included in one mortgage payment including the garbage I don't know that's just the way Pennsylvania does it they give you a choice if you want to pay separately or if you want it all in one payment and I choose to have it in one payment. I also do not pay any water or heat the tenant paid for that. I got it figured out I think
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Bjorik Mutize
That's how I was getting confused on the calculator because my taxes insurance and garbage is all included in one mortgage payment and then calculator have me putting all of that in separate
New member, and 1st time posting. Been reading up on the forums almost daily over the last few months, as I am looking to get a house hack 2-4 unit before the end of the year.
Unless I missed something completely from the calculator, what I read in the forums, and what I have seen/heard in the podcasts and webinars, I believe that the expense percentage comes in from total rent, and not a percentage off of the leftover money when PIMI is taken away. That being said, the math still seems to support cash flow of $223.75 using a 35% expense ratio.
Someone please correct me if I am wrong, as I want to make sure that I am solid on making these calculations for when the time is right for me as well.
Rental Property Investor · Member since 2018 · 16 posts · 0 votes
7y
@Lawrence L.
I'm holding 35% for maintenance fees vacant fees. I could hold 50% but I feel 35% seems to be enough. Like I said my mortgage includes the garbage taxes and insurance so that all comes out of one payment the other 35% is for maintenance vacance and miscellaneous