What cash on cash return would you recommend for a single family home rental property where the goal is cashflow not appreciation? So normally, I think least 8% return is what you’re trying to shoot for. So if you’re using an analyzer, what I would put in there and make sure you’re also including all the.
Repairs maintenance. Most people forget about the cap ex and the vacancy that you’re going to have, and also include the property management. So for a property that is friends for a thousand dollars, so you guys can buy a hundred thousand dollar houses out there that will rent for a thousand dollars. So out of a thousand dollars rent, each of my fingers is a hundred bucks.
You’re going to put aside a hundred bucks for repairs. $100 for big cap ex items. And that is you’re going to eventually need to repair the roof, maybe paint the house, big items. That’s cap ex. You’re going to need to spend another a hundred or so dollars stuff. That’s going to go wrong, right? Things are going to go the way you want it.
So you want to have that money sitting aside and you’re going to have vacancy. Another a hundred bucks is going to be paying your professional property manager because we teach you guys to be investors, not landlords. And then the remaining money, the rest six fingers here, maybe $400 is going to your mortgage, insurance and taxes.
And that leaves you. 200 bucks, right there, $200 is pretty good buffer in my own opinion that you should shoot for assuming that you’re accounting for all the expenses in your underwriting. But again, download the analyzer and run the numbers yourself. And after it’s all said and done on that hundred thousand dollar property, you’ve probably put down 20 or $25,000 and you’re making into your cashflow is that $200 a month.
That is $2,400 a year. So I think the math is $2,400 divided by $25,000, right around 10%. And that’s how we backed into that. At least the 8% cashflow number assume, and again, you’re underwriting your deal the right way. .