Passive income

2 Replies

Hi everyone! I'm new to real estate and I had some questions. I wanted to know what would be the average percent that you would go up on rent if you was to subject to a deal to a tenant? Example: mortgage-800 so should I rent for 1000 or 1500. Also, should I set up an account just for rental income? Should the income be under a LLC?

Originally posted by @Yvonne Mitchell :

Hi everyone! I'm new to real estate and I had some questions. I wanted to know what would be the average percent that you would go up on rent if you was to subject to a deal to a tenant? Example: mortgage-800 so should I rent for 1000 or 1500. Also, should I set up an account just for rental income? Should the income be under a LLC?

 It is going to depend on what rent the property can command.  There is a lot more that goes into it besides just rent - mortgage, I suggest you check out this:

https://www.biggerpockets.com/renewsblog/2010/06/3...

https://www.biggerpockets.com/renewsblog/2013/02/2...

As far as a separate bank account, yes I think that is a good idea. 

Starting an LLC is a personal choice, and it will depend on your financing. You can't get a traditional mortgage with a LLC, only a commercial loan

I run my properties at hard expenses (mortgage/taxes/insurance) + 20% maintenance.  From that point, i can mark up for profit margin, though for me recently, large capital expenses dug deep into the margin, thus will take a few years to recoup.  All in all though, the hard base + 20% is pretty standard to cover the costs of running the property, and hopefully keep u above water if large capital expenses hit like a new roof, appliances, etc...

I do not run under an LLC, though do use umbrella insurance to cover any large liability risk. Indeed, a must is to set up separate bank account for handling rental income/expenses.