Breaking down one dollar of rent

[Tracy Minick]

This analysis was found at the Rental Housing Association of Washington! Too good to not share!

Breaking down one dollar of rent:

COST

BREAKDOWN

EXAMPLES OF WHAT IT COVERS

38 cents

Pays for the mortgage

Avoids foreclosure of the property

16 cents

Operating expenses

Property and liability insurance, utilities and ongoing maintenance

14 cents

Property taxes

Supports the community through financing for schools, teachers, emergency service and other important local needs

12 cents

Capital expenditures

Such as the roof and HVAC replacement and other important repairs that help ensure quality housing

10 cents

Payroll expenses

Includes pay for employees who operate and maintain the community

10 cents

Returned to owner

Includes the many apartment owners who are themselves small businesses and rely on this revenue to make ends meet, and investors, which include public pensions and 401ks, on which many Americans rely on

Rising Property Taxes

[John Underwood]

My formula is different. 

I figure one month of rent goes to pay property taxes, one month goes to insurance.  I pocket the rest.

I don't have mortgages on my properties and I buy new ones with cash. 

Yes there is always a couple of HVAC units, a roof or a bathroom floor that needs replacing every year, but I have plenty of cash reserves for those things and have plenty of rent coming in every month to absorb these things with no issues.

So if I have a property that rents for 1k I can just multiply by 10 to get a ball park of what that property can generate if there are no major repairs that year on that property.

I actually look for things to spend money on each year so that I maintain my portfolio of properties. 

I know of one house that I want to replace all the windows in next year. 

Any way the formula is much different when you don't have mortgages.