Updated over 2 years ago on . Most recent reply
Things that erase cashflow to factor in up front when analyzing a property
What I have learned is this.
Note: I am still a rookie and only in the single digits for doors owned.
Big factors that quickly erase cashflow and that may put sizable monthly cashflow even into the negative:
Not budgeting in all the placement fees, renewal fees and percentages, certification costs (mandated by the municipality)
Many management companies do a very good job taking care of properties including one of mine. They are great at being responsive to tenants.. BUT this comes at a fairly high cost. In one of my properties, I ran numbers and in the first year, these costs put my repair costs on an already well maintained property at 29% of my gross rental income! Granted this will hopefully come down in the second and third year… Then the many placement and certification fees, etc. amounted to an additional 5+% on top of my contracted monthly management fee/% costs. Your income and cashflow may be heavily impacted by the condition/age of the property as well as the socioeconomic class of tenants you have and so on…