If I own it, what should expenses be?

4 Replies

Hi BP. I purchased my first property last July and fixed it up. Got it on the market and rented it this March. I paid cash ($12,500) for it using my self-directed retirement account. My question is, does the 50% rule still apply if I don't have debt service? I do pay a property management fee of 8% and the property is renting for $600.00.

Thanks.

Yes, expect 300.00 profit minimal. The other 300.00 will be expenses like the management fees, taxes, delayed maintenance, and vacancies you may occur in the future. I sounds like a great first deal, congratulations!

@Stanley E.

Great Job Stanley for your first deal.  What other expenses do you think you will incur.  Property taxes, insurance, landscaping, capital expenditures,?

Calculate all these expenses and you will arrive at the net.  It appears your figure of 300 is correct.

If you net 300 per month, 3600 per yr, you will have you money back in 3.5 years.  Now that is fantastic

Good Luck

Thanks everyone. I feel a bit better now. I did have a major hiccup. I had an A/C issue that cost me a little over 1K. Made me a little sick because I saw my profit dwindling. All of the Income from the property goes back into my retirement account. As for other expenses, i footed the bill for imutilities until I got it rented and now just minor repairs. I don't do the landacaping unless it is vacant then I get in the weeds...literally.

Thanks again everyone.