10% Capital Expenses - driveways, roofs, furnaces, items that last longer then 5 years
5% Maintenance - appliances, carpet, paint, items that last less then 5 years
5% Vacancy - people move, die, lose their job, etc. this is assuming a A or B class property, C&D's should be 10%
7% - 15% Property Taxes - depends on where you live
10% - Property Management - you can do it yourself, but you should still account for the cost, time isnt free for anyone in reality
5% - 10% - insurance
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Thank you for posting some categories. Are these categories from a book or did you come up with them?
I have a 4 bed/2 bath that now rents for $1900. I purchased a 4 bed/2 bath rental house in May 2007, for 182K. I did 10K in improvements which included a new furnace, flooring, tons of paint, new plumbing which I paid for. Built a wall for the 4th bedroom. If I divide $10,000 by 96 months I get $105 a month 5.5% to date. I did the original rehab to the house myself, but paid for labor for most repairs after the purchase.
Principle and interest is $760. I put 20% down on a purchase price of 182K. Original rate was 6% and refi-ed in 2009 for 4.75%.
If I was to rent out the whole house in 2007, it would have been around 1300. However, I lived there and rented out 3 individual rooms for $325/room each. The rent 8 years later is now 1900/month.
10% Capital Expenses - driveways, roofs, furnaces, items that last longer then 5 years
Original Rehab of House: $10,000. Divided by 96 months is $105/month or 5.5%.
Water heater in 2008 ($800) and I paid to have a new a/c system installed in 2010 for $2100. A new roof was installed in 2002, so I don't have to worry about that in a while.
$2900 divided by 96 months = $30/month or 1.5%, not including original rehab.
5.5% + 1.5% = 7% for this category if I consider the total rehab.
5% Maintenance - appliances, carpet, paint, items that last less then 5 years
New washer ($325), dryer repair ($250), new dishwasher ($600), water damage in basement ($1200), new shower unit in basement ($2400), hail damage to shed ($150), electrical fixes ($250), plumber to snake the drain ($150), touch-up paint ($250), & microwave ($300) and cleaning supplies at $125.
Total is $6000, divided by 96 months is 63/month or 3.3%5% Vacancy - people move, die, lose their job, etc. this is assuming a A or B class property, C&D's should be 10%
Over the last 8 years, my vacancy rate has been 0%. It is a college town and I typically show the property 4-5 months before it is available. I usually have over 10 applications of people who want it.
7% - 15% Property Taxes - depends on where you live
The property taxes are 1530/year, so this is 128/month or 6.7%
10% - Property Management - you can do it yourself, but you should still account for the cost, time isnt free for anyone in reality
I manage the property myself. I think arebelspy has said that he averages about 1 hour/month per rental unit. I would have to agree with this. My time is worth $35/hour, so I am averaging 1 hour/month that is $35/month or 1.8%. 5% - 10% - insurance
With a 5,000 deductible, my yearly rate is $675. This is $56/month or 3%.
My total is 21.8% including total rehab. I'm not saying that it would be 21.8% forever, but if I sold tomorrow it would be after 8 years.