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How do you calculate this for a 3-4 unit multi family

2007-03-04 10:51:10 · 2 answers · asked by kizito2001 1 in Business & Finance Renting & Real Estate

2 answers

Are you renting/leasing the units?

Have you spent money fixing it up?

If so, add up the following:
1. total cost of renovation divided by the time (in months) you spent doing it.
2. your monthly mortgage payment
3. $ of repairs maintenence and other expenses you expect to spend each month
4. $ of all other costs not rolled into your mortgage payment (insurance, whatever utilities you are going to cover, etc.)
5. $ cost of doing business (your time, office supplies, help if needed)

So, for example (I am making these numbers up) -
1. say you spent $10,000 in rennovations and it took you 6 months.
1 = 1666.00
2 = 2000.00
3 = 500.00
4 = 300.00
5 = 150.00

total = $4600

so, each unit should be rented out at $1150-$1500 to break even.

Of course # 1 is highly variable... if you want to adjust the time it takes to see a return on your investment make it smaller amounts per month... if you didn't spend anything no need to even worry about it.

2007-03-04 11:07:25 · answer #1 · answered by Tiff 5 · 0 0

Calculate up all the expenses involved to get it up and running including purchasing the property and improvements etc. At this point you will have a large negative balance, say $100,000. You will next calculate your net income per month. If you rent it out at $750 per month and also incur monthly expenses of $250 per month your net income is $500 per month. Take your initial cost of $100,000 divided by your monthly net income of $500 and you get 200 months or 16 2/3 years to break even. This is just a simple example though so you would probably have to sit down for a few hours to accurately calculate all your income and expenses you expect to have.

2007-03-04 19:00:31 · answer #2 · answered by k_hart100 3 · 0 0

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