All Forum Posts by: Andrew M Bickett

Thanks team.

I believe you were right; while some expenses are percentages, my error was believing all these expenses stayed static regardless of the rent each month. 

What is a good rule of thumb for calculating expected expenses each month? 

Originally I was thinking: 

Vacancy = 5%

CapEx = 5%

Maintenance = 5%

Property Management = 8%

Lease placement fees - 2.5%

Thus my overall monthly expenses, I wrongly thought were ~25%. What is more realistic in each category to have expenses closer to ~50%? 

Found a duplex in a decent neighborhood renting for $600 and $550, respectively with a sale price of only $79,000. 

Even accounting for 25% of rent going to Property Management, CapEx, Repairs, Vacancy etc, my calculations still see a HUGE cash flow ROI.

After mortgage, property insurance and taxes, looking at a $400 monthly cash flow. 

My question is this: I'm assuming I use a Property Management group to deal with setting up tenants (which is 8% of my 25% expenses I mentioned earlier) then where is the risk? They even guarantee rent and to have a tenant! Why isn't everyone just gobbling up these properties, having someone else take care of it and enjoying a $400 monthly cash flow after all your expenses? What am I missing?