Cash Flow from 196 rentals... Less than you are thinking...
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The YouTube video discusses how to analyze the cash flow of rental properties. The speaker emphasizes the importance of cash flow and suggests using Zillow to determine rental rates for similar properties in the area. They outline six major owning expenses that need to be subtracted from the rental income, starting with the mortgage. The speaker also mentions the importance of maintaining good relationships with banks and having properties that remain rented, even during economic downturns like the one in 2008.
When buying rental properties, it's important to know how much you're buying the property for and how much your mortgage will be every month. Real estate taxes are paid at the end of every year, but it's important to accrue for them every month. Insurance is necessary for rental properties, but it's important to find an insurance broker or company that specializes in rental properties. Maintenance is an expense that can be unpredictable, so it's important to accrue for it every month.
Maintenance is an expense that should be accrued for every month, even if it doesn't seem like a big deal at first. Over time, maintenance will need to be done that does not fall on the tenant. It's recommended to set aside about $150 every month for maintenance. Vacancy is another expense that needs to be considered. Even if a tenant is there for a few years, eventually they will move out. It's important to set money aside for this because when the tenant moves out, there will be no rent collected for at least one or two months.
The speaker shows their rental portfolio sheet and explains how they calculate their monthly cash flow. They have 196 rental properties, including an apartment complex and storage units. The sheet lists the property addresses, market value, loan balance, equity, and loan-to-value ratio. The speaker collects 98-99% of rent every month and sets aside 5% for vacancy. They also have bank financing and private lenders for long-term investments.
The speaker provides a breakdown of their monthly expenses for their rental properties. They pay private lenders a little over $9,000 a month, have insurance expenses of $8,000 a month, and set aside almost $18,000 a month for taxes. They also set aside $150 per month per house for maintenance and $75-100 per apartment door for maintenance. They have an in-house team for property management and set aside money every month to pay them. The speaker's net cash flow is a little over $32,000 per month, which fluctuates depending on maintenance expenses, rent collection, and other factors.
The YouTube video discusses how to analyze the cash flow of rental properties. The speaker emphasize