What's your average net income per rental property?

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What's your average net income per rental property?

Tim Bee
Investor · CA · Member since 2023 · 196 posts · 107 votes

Hi, I am new to this forum.  My question is what is your average net income per door?  Excluding mortgages/loans.  

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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3y

Hard to tell, but for small multi family in Milwaukee $200 per door is kind of an average number. This includes debt service and actual expenses. My portfolio is mostly higher price points per unit, so more capital invested and I'd like to see at least $500 when we put them in service. Over time these numbers tend to increase.

At $200 a door it takes a lot of units to make some money, which illustrates the importance of principal pay down, equity and appreciation when it comes to wealth generations. Some people never get there, here is a story. 

I run a lunch and learn series at our local association and one of my topics every year is: how to make a million with rental properties. It's a math exercise and you can use a BP calculator. Starting out with a normal W2 you can conservatively make a million in about 7-8 years, no more than 10. Most of that will be equity, not cash flow. After running everyone through the exercise I asked for questions and an older guy raised his hand and said he has been doing this for 25 years and has 30 doors and is no where near a million. 

Turns out he had accumulated a portfolio of duplexes in low income areas, has always done all the work by himself and is pretty much spending all of his cash flow and capex and repairs. The properties are not worth much, but they are old, so they require substantial capex. He had no significant principal pay down, a lot of the properties were bough cash. And very little appreciation, they were 50k then, they are 50k now.

Bottom line, cash flow is vitally important to keep your operation going, but it is not how you generate wealth in real estate. You need a a holistic view and IMO it's best to find a balance between cash flow and equity generation.

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  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    3y

    Hard to tell, but for small multi family in Milwaukee $200 per door is kind of an average number. This includes debt service and actual expenses. My portfolio is mostly higher price points per unit, so more capital invested and I'd like to see at least $500 when we put them in service. Over time these numbers tend to increase.

    At $200 a door it takes a lot of units to make some money, which illustrates the importance of principal pay down, equity and appreciation when it comes to wealth generations. Some people never get there, here is a story. 

    I run a lunch and learn series at our local association and one of my topics every year is: how to make a million with rental properties. It's a math exercise and you can use a BP calculator. Starting out with a normal W2 you can conservatively make a million in about 7-8 years, no more than 10. Most of that will be equity, not cash flow. After running everyone through the exercise I asked for questions and an older guy raised his hand and said he has been doing this for 25 years and has 30 doors and is no where near a million. 

    Turns out he had accumulated a portfolio of duplexes in low income areas, has always done all the work by himself and is pretty much spending all of his cash flow and capex and repairs. The properties are not worth much, but they are old, so they require substantial capex. He had no significant principal pay down, a lot of the properties were bough cash. And very little appreciation, they were 50k then, they are 50k now.

    Bottom line, cash flow is vitally important to keep your operation going, but it is not how you generate wealth in real estate. You need a a holistic view and IMO it's best to find a balance between cash flow and equity generation.

    8Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y

    For me 45-60% of the rent for places with condo fees and ~75% of the rent for single family homes...if I had no mortgage.  Rents vary from $1100 to $1800.

    2Reply
  • Nick Robinson
    Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes
    3y

    NOI (Does not include PM, Loan)- $980/door

    Cash Flow, which is after PM, Loan, and is the actual money coming into my pocket is $428.57. I expect this number to rise a little as I had one vacant unit consistently the past 3-4 months

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Grayson Spittel:

    @Tim Bee just to throw my 2 cents in… I've gone the STR route and I don't purchase anything unless I have a Cash on Cash return of 15+% and net cash flow of $1000 per door. As a few others have mentioned, when you use $100/door per LTR as your criteria, no matter if you are saving CapEx/maintenance every month, there's too little extra cash to adequately/effectively build up cash reserves, save for future large expenses, and use as a reliable income source.

    All the best!

     And where is this found in today's markets?

    If it's something done in year's past then sure, but being relevant to today's market I have a hard time believing your finding that. So if you had to invest today, how do you do it?

    1Reply
  • Tim Bee
    OP
    Investor · CA · Member since 2023 · 196 posts · 107 votes
    3y
    I got a 4bed/2bath a few months ago in CA for 215K.  Rehabbed it for 25K and now it rents for 2450/mo. I paid all cash.  I am sure there are better deals out there but for me all the positive cash flow is nice.
    6Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y

    In my expensive-ish market, my metric is capturing 4 yrs worth of avg SFH cf at the buy.

    Avg SFH cf needed for the effort =$400/mo. Min equity capture = $48k. Not hard if buying off market at a 12% discount. 94% FMV minus commissions not required.

    Then if house is too nice for a normal rental, slow exit with a retail LO.   

    My avg MF cf /door was $200.  I wouldn't mess with a house for anything less than $400/mo or 4yrs worth up front. 

    1Reply
  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
    3y

    A lot of small investors look at cash flow as what is left over after paying the basics like the mortgage, insurance, and taxes.  How do you factor in your capex?  Every house is going to need something eventually and it's all variable.  This is your hvac repair, roof replacement, painting, and all the other small repairs that you need to perform over the life of the property.    Do you factor those costs as a percentage off of your cash flow?

    1Reply
  • Delbert Standifer
    Rental Property Investor · Carson, CA · Member since 2019 · 185 posts · 74 votes
    3y

    @Tim Bee

    Don’t worry I totally understand your question. I have 11 doors and average about 200 per door. 2200 net per month is not bad. Most of my doors are in 100k less market. When I pay the 100k market doors off(less than 10 years) I’d average about about 500 per door. I’m comfortable/confident with my strategy. Good luck to you all especially the so called experts!

    0Reply
  • Grayson Spittel
    Rental Property Investor · Wake Forest, NC · Member since 2017 · 128 posts · 131 votes
    3y

    @V.G Jason all my properties are purchased since March 2020. But they are short term rentals, like I mentioned. Those numbers are absolutely attainable, but becoming harder 100%. I’m under contract on another property right now, at a 8.1% interest rate, and am still able to hit those figures.

    1Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    3y

    @Tim Bee

    I average about $13,000 per door per year before depreciation.

    0Reply
  • Taylor Dasch
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    3y

    I just started in the grand scheme of things, but for cash flow on the three properties that are occupied right now, I get 450,350, and 600 which averages out to 433 I think. Close to my 500/ property goal. When I get this next one completed, I should average above the 500!! 

    0Reply
  • John T.
    Rental Property Investor · Central U. S. A. · Member since 2013 · 296 posts · 149 votes
    3y
    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Grayson Spittel:

    @V.G Jason all my properties are purchased since March 2020. But they are short term rentals, like I mentioned. Those numbers are absolutely attainable, but becoming harder 100%. I’m under contract on another property right now, at a 8.1% interest rate, and am still able to hit those figures.


     Cool, mind showing the math? 

    1Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    3y

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Curtis Mears:

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.


     So over $1k a month, that's net or gross?

    0Reply
  • Mario D.
    Real Estate Agent · Salt Lake City, UT · Member since 2021 · 18 posts · 5 votes
    3y

    @Tim Bee depends on where you are located. I am in a very high appreciation market. So my equity has doubled on all my properties in the past few years but has tough cash flow compared to the midwest or south. I shoot for $200 - 300 door which includes my PITI.

    1Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    3y
    Quote from @V.G Jason:
    Quote from @Curtis Mears:

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.


     So over $1k a month, that's net or gross?


     Ner after all expenses except depreciation.

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Curtis Mears:
    Quote from @V.G Jason:
    Quote from @Curtis Mears:

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.


     So over $1k a month, that's net or gross?


     Ner after all expenses except depreciation.


     That's phenomenal, mind sharing the breakdowns of a few of them?

    0Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    3y
    Quote from @V.G Jason:
    Quote from @Curtis Mears:
    Quote from @V.G Jason:
    Quote from @Curtis Mears:

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.


     So over $1k a month, that's net or gross?


     Ner after all expenses except depreciation.


     That's phenomenal, mind sharing the breakdowns of a few of them?


    Here are the numbers in more detail. I do not have all individual line items broken down, just the summary.  I could get the individual numbers if people are interested. I had 12 properties, but sold 2 a year ago because prices were insane. The numbers are averaged over the properties going back 5 years. All the numbers are annual.

    Gross Rent $18,210 (increased to $20k for 2022 due to rapid rent increases in 2021 and 2022)

    Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916

    Indirect Expenses (Telephone, Travel, prof fees, etc) $351

    Net Income (Rent-Direct-indirect) $10,944

    1Reply
  • Will Conner
    Member since 2018 · 8 posts · 1 vote
    3y

    @Marcus Auerbach

    Is this L&L available online, by chance?

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Curtis Mears:
    Quote from @V.G Jason:
    Quote from @Curtis Mears:
    Quote from @V.G Jason:
    Quote from @Curtis Mears:

    @Curtis Mears

    Sorry, I forgot to pull out some.other income. My average per year is about $11,000 per property. This is for 10 sfh 3 bedrooms and 2.5 bath properties averages over 5 years.


     So over $1k a month, that's net or gross?


     Ner after all expenses except depreciation.


     That's phenomenal, mind sharing the breakdowns of a few of them?


    Here are the numbers in more detail. I do not have all individual line items broken down, just the summary.  I could get the individual numbers if people are interested. I had 12 properties, but sold 2 a year ago because prices were insane. The numbers are averaged over the properties going back 5 years. All the numbers are annual.

    Gross Rent $18,210 (increased to $20k for 2022 due to rapid rent increases in 2021 and 2022)

    Direct Expenses (includes maint, ins, tax, HOA Fees, and depr) $6,916

    Indirect Expenses (Telephone, Travel, prof fees, etc) $351

    Net Income (Rent-Direct-indirect) $10,944

    Ok, so nothing budgeted for vacancy, capex unless that's maint and property management ? And you have no debt on any of these?

    1Reply
  • Michael Giuffre
    Rental Property Investor · Raleigh, NC · Member since 2015 · 51 posts · 15 votes
    3y

    Average NOI per door (before mortgage) is currently $710+/mo. across roughly 40 units.

    0Reply
  • Tim Bee
    OP
    Investor · CA · Member since 2023 · 196 posts · 107 votes
    3y
    Quote from @Michael Giuffre:

    Average NOI per door (before mortgage) is currently $710+/mo. across roughly 40 units.

    Nice, so 28K net profit per month.  How much is the monthly loan payment if you don't mind?
    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Tim Bee:
    Quote from @Michael Giuffre:

    Average NOI per door (before mortgage) is currently $710+/mo. across roughly 40 units.

    Nice, so 28K net profit per month.  How much is the monthly loan payment if you don't mind?

     How is debt not included in net?

    If you're going to finance this through any means, or going to finance anything extra in life--they are going to evaluate your debt situation. It's not a write off in it's entirety. 

    0Reply
  • Michael Giuffre
    Rental Property Investor · Raleigh, NC · Member since 2015 · 51 posts · 15 votes
    3y
    Quote from @Tim Bee:
    Quote from @Michael Giuffre:

    Average NOI per door (before mortgage) is currently $710+/mo. across roughly 40 units.

    Nice, so 28K net profit per month.  How much is the monthly loan payment if you don't mind?
    Approx. $12k/mo. Total principal and interest payments, of which principal accumulation is about $3.5K/mo. Which I consider to be extra “forced” savings on top of the rental free cash flow of $16k/mo.
    0Reply
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