100% New to REI, trying to learn math...

[Rael Mussell]

Ok, so I am 100% new to this game, but have everything lined up to get into the game (So I think.)

I've picked two successful REI's brains for hours on end and have a lot of good advice on incorporation, insurance amount to carry, rent loss insurance, et al..

So lets just get to it:

I have found a SFH listed for 23,300. It was a previous rental and I would rent it again.

www.ziply.com and craigslist shows comparables in rent of 1500.00-1600.00/mo

The neighboorhood is 44% rental community. I actually work about 1 minute from the property and the area is NICE. It has crime, but I would walk the streets at night feeling safe.

So, using some math I found here:

GR-OE=NOI

QUESTION1: What encompases OE? (Tax/Insurance/Maint?)

So, let's lowball it all --

1500-1500(.5)=750

NOI = DS + CF
NOI-DS=CF

Mortgage = 23,300 @ 7%, 30yr = 153.02
Taxes (NON-HOMESTEAD) = 4700 (Guesstimate based off other comparables and citysearch.com data) = 393/mo
Insurance = 100.00/mo (Guess)

750-153.02 = 596.98

???

[Jon Holdman]

There are several sticky threads in the Rental Property Forum that deal with expenses. Lots more than what you list. But, it appears you understand the basic math.

You should assume that property will need some work to get it to a rentable state.

If you can buy a property for $24K that needs no work and rents for $1500, I'd be truly astounded. The cheapest thing I see in Canton MI on realtor.com is $49K. Just guessing, your example probably needs a lot of work. Looks like all the listings under $80K for Canton are REOs, so I'm SURE they all need work. Nevertheless, check it out. You may have found a screaming deal.