My numbers for cheap rust-belt Ohio rentals

8 Replies

Here are my numbers (rounded) for the first three quarters. It's for 11 units in rundown-rust-belt Ohio. I know I could be making more money, if I did not continue to invest in the houses. My plan is to continue to invest majority of my profits back into the portfolio in some way.
I thought this data would be useful to others who are thinking about buying cheap houses that seem to always need work, in distressed areas. When the 50% rule or the 2% rule fail, to capture the situation, there's data!

Q1:

94% Occupancy
$15,100 Gross
$6,200 Expenses
$1,700 Taxes
$4,100 Labor
$3,100 Profit

Q2:

81% Occupancy
$11,400 Gross
$2,300 Expenses
$1700 Taxes
$4,100 Labor
$3,334 Profit

Q3: *Added new property
79% Occupancy
$12,000 Gross
$2,900 Expenses
$1,980 Taxes
$4,400 Labor
$2,700 Profit

What part of Ohio is this for?

Would you be willing to provide more detailed breakdown on your various expense numbers? Specifically, do these expense numbers include any outlay for debt service?

It's in central Ohio. Not too far from Columbus. 

The expenses are mostly physical. Stuff from Lowes. A small portion are bills, for utilities. None of the expense is for debt, the houses were all cash buys. I'm trying to bring down those expenses by putting more utilities in the tenants names. I can do a better break down of expenses  after I sit with my spreadsheet for a while. 

@Jessica B. Thanks for sharing the numbers. Can you share the average cost of each Unit. The average rent seems to be around 500 per unit?

Also can you let us know if these were bought turnkey or my other means. Do you think the repiars would go down if you were not doing improvements. That is what percent of labor and repairs is for actual repairs vs improvements.

Why are the occupancy rates lower? Is it evictions or tenants leaving?

Would you mind share what is the CoC you are seeing.

Again thanks for sharing.

Wow these are really good questions. The average rent is currently $510, which is up from $470 at the beginning of the year. Occupancy has been effected by 1 eviction, 2 folks moving out and the addition of a new rental. The average cost per house is about $12,000. With a low of $8,000 and a high of $26,000. Each were bought needing repair, none were turn-key. As for the "improvements" vs "repairs." I would have to guess at that percentage right now.

I don't know what CoC is.

@Steve Baldwin Thanks, for the offer. I've got a good team right now. 

@Jessica B. Thanks for answering my questions. 

So looks like your investment is about 132,000 (based on 12000 * 11). 12,000 per property is very cheap so I am assuming these are C/D properties? 

CoC Is Cash on Cash return you are seeing. But since you paid all cash for the properties this would be the same as cap rate. Since you are using not using Turnkey providers are you just finding properties with realtors?

I would say at this point I have about 200,000 invested in the properties. Majority are in C neighborhoods, 1 is in D and two are in B. The division is a little off, because some are duplexes. Regardless, the result is the same, cheap properties. All except a few of them were foreclosure, or sheriff sale houses.
On the low end my return on that investment would be 6% assuming the properties are not appreciating and I lose all that I am putting into them for repairs and improvements. On the high end I could believe Zillow. Which says all of my properties are worth two to four times what I paid. I tend to assume that some of what I'm doing is improving the property. Therefore, I would say my return would be on the low end 8%. I could mess around with my numbers on the high end to show crazy good returns, but that would be misleading. 

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