Monthly income from SFH rentals?

Question

Just finished preparing for taxes .

Paid cash — , after all taxes ,

insurance , and repairs on

my 40-$45,000 houses ,

monthly  take home  is $450 $500 per house

even though rents are double that much .

Not sure if I’m doing something

wrong , or is that about what is

average for each door?

What are you taking in each month ?

JD Martin · Answer

Ignore it IMO. That's his opinion and philosophy. The "dead equity" horse has been beaten to death, barbequed, and eaten here at BP. For some unknown reason the fact that you can leverage with real estate, while you can't with other investments, means that every time you choose not to leverage you're wasting your money. Funny because I've never heard anyone say that about $40k sitting in mutual funds. I wonder what my bank would think if I asked for a $40k loan against that principal sitting in a mutual fund?

Anyway, back to your question: that's not really far off. Maybe a little low but it depends on the condition of your units and where you are. If you figure you're clearing about 50% of your gross rent in net you're about right.

Dennis M. · Answer

@Marci Stein

Sounds right . There’s something called the 50% rule .

Expenses run about 50% of the total income for most people on average . If you have no mortgage I would expect 4-500 monthly  income on a 40k house . This would theoretically give you a cashflow with a mortgage around 150-200 a door so  I think your doing as fine

Marci Stein · Answer

Thanks Sam and JD Martin for your support :)

Sam Shueh · Answer

% rule is just an indicator. The key is cap rate. If cash flows, and cap rate is better than the bank offers, you are doing fine. All the best,

Sam Shueh

Marci Stein · Answer

It’s $400 per house - not in total .

Marci Stein · Answer

THOmas - if 10% is $375 per month , and I’m taking in $400 - I’m making the 10 percent- not sure why you see it differently?

Thomas S. · Answer

You are far worse than the 50% rule my friend. The 50% is after all expenses plus debt repayment. Since you paid cash you need to understand that the cash is generating a return in addition to the house. When you allot a minimum 4% (mortggae rate) return on your equity that is $150/month which means the property is generating $200- $250 per month not the $350 - $400 you think..

Personally I expect my cash to generate a minimum 10% which in your case would be $375/month. This is why investing in low priced properties that you can not leverage is not a smart use of cash. To make money you need to stay away from SFHs and invest in C/D class multi units. SFHs simply can not generate enough return to justify the dead equity. $45K would generate a higher return in a mutual fund without the nuisance of owning real estate and managing tenants.

Marci Stein · Answer

MY bad ! Monthly take home is

$350 - $400 .

Guess I’m not even meeting the

50 percent rule.

Marci Stein · Answer

Shaune - LOL  !

Marci Stein · Answer

Since  I get $850 - 950 in rent ,

didn’t feel like $500 was enough to take home.

I buy cheap houses so they do need

many repairs during the year , which I accounted for in my numbers .

It’s reassuring to hear from you guys it’s an acceptable income.

Guess I’ll have to step it up and buy a

few more if I want financial comfort .

Thanks!

Monthly income from SFH rentals?

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