[quote=patb][quote=scott-at-alumni]Maintenance number seems high – I’ve got 3 older (pre-1980) SFHs rented and I haven’t had major problems yet, except for 1 furnace replacement, in 10 years of renting them out. And how did the 1% for maintenance become $200/month? I must have missed something. 1% would be less than $200/year.
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I usually figure Proeprty/casualty and Liability as running the same as
local taxes, if it’s a bit lower, cool, as for 1% of the maintenance, what i was
thinking was 1% of the property value, per year. college kids are
rough on a project, so, it’s a good number there.
i just don’t like the idea of running a rental anywhere you can’t
get to in 25 minutes.
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Absolutely those maintenance and overhead costs could be overstated. However, the original post article seems to miss the point, often repeated in these forums and among savvier investors, that real estate had better do a lot more than just cover the costs to offset the risk that a bad tenant gets in there and that the value of the property goes down. The real estate boom years mentality, which will take a long time to unwind, is that you can tolerate even negative cash flow because the value of the property goes up. Realistic is something more like that you demand 10-20% better than cash outflow to compensate for the risk.
What else do you expect from Business Week, let alone its Lifestyle section.
