Cash Flow

Comments(6)

• 
  d_random3rd May, 2005

  Ray-
  
  How much cash flow would you shoot for on a 3BR/1BA single family?

• 
  fdoneit3rd May, 2005

  Yes, I mean after all expenses are paid - figuring in PITI and 20% of gross rent for management, maintenance and repairs. Is the liability coverage that is normally packaged with homeowners insurance (full replacement coverage) sufficient for rental properties?

• 
  ray_higdon3rd May, 2005

  D_random, I would want at least 150 for a SFR. Duplex would be 300, triplex - 450.
  
  Rmdane, I totally and completly agree, too many new investors do not know how to determine cashflow. 150 cashflow to me is after PITI, 5% repairs, 5% vacancy, advertising, legal, lawn maintenance, pest control, and supplies. Now, for those in other parts of the country, 5% vacancy may be too low.
  [addsig]

• 
  smithj23rd May, 2005

  I like the formula for calculating cash flow and have tried to use it on all the properties I try to acquire. However, I found that the only way I could get the formula to work on a property was if I made a large downpayment. I always try to get the maximum financing that I can get on a subject property and as a result, the formula does not work very well in my part of the country.
  
  How would you adjust your formula to account for downpayment? For example, If I only finance 60% of the purchase price, I am sure that I can make a $200 cash flow, but am I really in a better position than someone who finances 100% and makes a $25 cashflow?
  
  Just some thoughts on this concept of cashflow.
  
  JS.

• 
  d_random3rd May, 2005

  Thanks Ray! Good to know.
  
  
  Quote:
  On 2005-05-03 19:07, ray_higdon wrote:
  D_random, I would want at least 150 for a SFR. Duplex would be 300, triplex - 450.
  
  Rmdane, I totally and completly agree, too many new investors do not know how to determine cashflow. 150 cashflow to me is after PITI, 5% repairs, 5% vacancy, advertising, legal, lawn maintenance, pest control, and supplies. Now, for those in other parts of the country, 5% vacancy may be too low.
  
  
  [addsig]

• 
  cyberpete4th May, 2005

  I bought the house in Januray and the tenants were a hold over from the previouse owner. They are in fact not smokers but they always had a bunch of people over who smoked all the time. Thanks to everyone for you input.