Where's the Money?

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Posted by Dr. B. (OH) on November 03, 2009 at 08:06:14:

Looking at a fourplex, duplex, triplex and SFH.
My background:I have been doing mobile homes for 7 yrs. I looked for my answer in the archives and couldn't find it.

I'm having trouble making sense of the rent at 1% of purchase price rule of thumb. This doesn't seem to fit with the 50% operating cost that is industry standard.
Here's an example:

150,000 PP
20% down
120,000 loan at 6.78% for 30 yrs
780.71 loan payment

1% of 150,000 = 1500/mo rent
50% of 1500 = 750 operating expense

So I've got :
750.00 operating expense plus
780.71 P & I

1500 rent minus 1530.71 loan pymt and expenses = (30.71)

Where's the money for me?

Steve

Follow Ups:

• Re: Where's the Money? Ben T 20:34:22 11/05/09 (0)
• Re: Where's the Money? BTI 10:22:39 11/04/09 (0)
• Re: Skewed Money Dr. B. (OH) 13:11:59 11/03/09 (0)
• Skewed numbers JT-IN 11:06:45 11/03/09 (1)
  • Re: Skewed numbers Todd(AZ) 16:34:39 11/03/09 (0)
• Re: Where's the Money? Kristine-CA 10:58:19 11/03/09 (0)

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