SouthEast Florida - Rental Property Calculator numbers

2 Replies

So my agent has been sending me tons of properties to calculate. For the most part the listings have a lot of the expenses already listed, and I don't have to estimate and I have been using specific percentages. Here is typically how I fill out the Rental Calculator.

1) Purchase Price, obviously. 

2) ARV I keep at the purchase price

3) Real current taxes on the property

4) purchase closing costs (if cash purchase I use 1% of purchase price. if non-recourse loan I use 2.5% because the points are 1% on it too. And I add $700 in the mortgage area for bank fees as that is what I have been quoted by the banks that do non-recourse loans. I expect to do 5/1 or 10/1 amortized over 25 years, so those rates are typical around 5.5% right now. 

5) If I have expense amounts I put them in as best as I can.

6) This is where I start to have questions. For the Variable Landlord expenses. I put in either 3 or 5% for vacancy depending on area. 

7) For repairs and maintenance I typically put 3% and then also 3% for Cap Expenditures. (Does that sound correct, too high? too low? As I believe here is typically where I might put it too high)

8) For Management I put 8% or 10% which is what my broker/manager will charge me.

9) For future assumptions I put 1%, 2%, 2% for the first three columns, then for resale I put 8%

So that is basically how I have been using the calculator, and I haven't found a property yet that I really really liked the results. But I am wondering if I am being way too conservative and therefore missing out on some good deals.

I also have been seeing that the Cash On Cash percentage seems to be going down when I leverage with a mortgage, rather than the other way around, which I sort of was expecting to happen.

Thanks

Oh, and I am really glad I went and got the PRO account so I can really play with these calculators, it is too much fun. And I love the ease of it and the reports are very pretty. My agent has a spreadsheet that has all that, but it is so spreadsheet like. ;)

Mark

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I believe your reserves are too low. I generally put 8.3% vacancy to cover one month per year of vacancy. I also reserve a minimum of 5% maint and capex, depending on the age of the property and mechanicals, as well as the condition of the property overall.
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