Cash Flow on rental property in NYC

Cash Flow on rental property in NYC

Member since 2018 · 14 posts · 1 vote
Hello everyone. My name is Jeff Morys and I am looking to learn to use the BRRRR method haha. My goal is to buy a duplex, live in one side, rehab and rent the other half. I want to also rehab my own side and use an FHA loan to House Hack the project. After 1-2years, I would like to rent my half of the duplex as well, refinance the project, and move on to the next project. My question is: After doing the numbers and calculating the cash flow, I will be left with $1700 of expenses which I will pay as “my own rent” on my half of the duplex. I used about 60% of the rent price to determine expenses and added those to the mortgage/tax/insurance costs. Now if I move out and rent the second half. Will I still have to calculate about 60% of new expenses to the second lease??? How do I calculate the realistic cash flow in this case?
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  • Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    Don't use a percentage of rents to calculate most expenses, because that is not accurate.  It is better to price out the things you will know in advance like insurance, property taxes, management, utilities etc. and use a much smaller percentage for unpredictable things like repairs.

  • Member since 2018 · 14 posts · 1 vote
    8y
    @Aaron Klatt Thank you Aaron! Well noted. You are right. The devil lies in the details right?! I struggle to get the expenses right in a duplex that I want to live in.
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