What does “number work out” mean in context of a rental property?
I always consider getting one and do a mental calculation of
cap rate = (rent – vacancy – tax -insurance – HOA – maintenace – Prop. Management) / Price * 100
In and around Central San Diego county, the result is typically 3% to 6% depending on whether I assign any value to maintenance and prop. mgmt. or not… While it is better than bubble days, that still does not interest me so I give up.
For those, who are into landlording now, what is the flaw in my calculation? or is 3%-6% now considered a good cap rate?
