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Click on this link to look at prices for local rentals: Attached is a rental cash flow analysis form that you can use to better help you when you are trying to assess what to do, i.e. consider Renting or selling. Remember, a rule of thumb is that properties are factoring at a rent rate somewhere between $0.70 - $1.10 / sqft. Keep in mind the larger the square-footage (i.e. 2500+ sqft) the closer to $0.70 / sqft the calculation will be. The market is constantly changing, so just as if you were going to list a home for sale you would want to look at current sales for comparables for a CMA (Comparable Market Analysis), I also look at current rentals for comparables for a CRA (Comparable Rental Analysis) in order to calculate a competitive rent rate for you, the owner. So the closer you are to deciding what to do is the appropriate time to do this analysis. You can always get updates based on what is currently listed for rent on the website since it could be within the same area as your property. Here is the approximate information regarding rental services. Monthly mgmt fee……7% to 10% of the monthly rent (depending on what services you require) Placement fee……….$395 (taken from new tenants 1st months rent…one time only) Your property address:_____________________________________________________ indicated, you can then print out your cash flow report and then analyze per web discussion. Description Expenses Your mortgage payment, including PITI and association fees if any-…… Insert payment here.>(PITI is - principal, interest, taxes and insurance) General maintenance repairs each month …………………..……… ……….…..Insert payment here.> $ 50.00( Average based on over 70,000 work orders = $50/month) Management Investment fee 10% of rental price (Tax Write off)Maintenance repairs projected when a tenant moves out and it's vacant $ 100.00( Average based on over 70,000 work orders = $100/month) Lawn service (optional) ………………………………………….……….... Insert payment here.>Pool/Spa service (optional)…………………..………………………….…. Insert payment here.>Total monthly payment ( Includes all of the above items) Income Monthly Rental Income ( Put in your best guess) …- ..………….………. Insert project rent here >(Remember what's in the newspaper or internet is sticker price, not what they rented for) (Normally the actual rent rate is $100-$200 less per month) Gross monthly cash flow (negative or positive) You receive 40% tax savings on your negative cash flow if any (Figuring 30% federal tax and 10% state tax - this will vary with each client) Depreciation …………………..………………………….…..Insert monthly estimate here.> $ 100.00(When your property becomes a rental property you can depreciate it like a (business since a rental property per IRS is a business and should be looked at as one) Net negative cash flow … (If any)….……………………………………………………..……..This is your true negative cash flow per month. By taking additional deductions on your paycheck each pay period, you can receive the tax savings monthly. Therefore, it enables you to use those funds to fund your investment. (and will NOT raise an audit flag)If your analysis shows a negative number here you do have a "true negative" each month so if you multiply that by 12 months - you'll have an annual figure. In order for a rental decision to work you would need to have in reserves at least that amount to fund the investment. This can come from a savings account or home equity line. (We recommmend you have $5,000 for each property in reserves)Please note we have anticipated and projected all costs in this analysis. Month to month you may not have these costs - but please remember, repairs are part of being in the rental home business as well as vacancies so you must project them. continued…. Rental Property Cash Flow Analysis Don't forget that renting a property is treated as a busines by the IRS. This means you have additional Tax Write Off's for expenses, so even if you have a negative cash flow each month you could end up with a lower net cash loss than the analysis shows. The following are typical tax deductible items on your tax returns Landscaping repairs, sprinklers, seed, fertilizer Painting Cleaning Repairs (Plumbing, fencing, etc) Phone calls made to Management One Trips made to property or Management One - Mileage Postage Any accounting fees, your bookeeper or CPA Office supplies Computer hardware and software |