What expense ratio should I target?

Many long‑term rentals fall between 35% and 50%; older properties often sit higher.

How big should a CapEx reserve be?

A simple rule is 5–10% of gross rent or based on a capital replacement schedule.

Landlord Checklist

Investors must model property taxes in operating expenses. Use our estimator to sketch annual costs, then refine with county data.

Use a realistic local multiplier
Model re-assessment jumps after purchase
Track caps and phase‑ins if applicable

Operating Expense Framework

Taxes (this tool)
Insurance
Utilities (if owner-paid)
HOA/Condo
Maintenance & Turns
CapEx (roof, HVAC, appliances)
Management (if applicable)
Vacancy

NOI & Cap Rate

NOI = Rental Income − Operating Expenses
Cap Rate = NOI ÷ Purchase Price
Stress-test with ±10–20% on tax assumptions and reassessment after purchase.

Underwriting Steps (Fast)

Run a baseline in our estimator with a realistic Local Multiplier.
Replace with county rate table numbers once confirmed.
Model post-rehab reassessment if improving value.
Check escrow impact on DSCR if financed.

Owner‑Occupied vs. Rental

Homestead or primary-residence exemptions typically do not apply to rentals, so expect higher taxable value and potentially different assessment ratios.

Operating Expense Blueprint for Landlords

Budget 30%–50% of gross rent for expenses depending on property age, climate, and HOA rules.

Category	Rule of Thumb
Property Taxes	Use last bill; add 5–12% cushion after reassessment
Insurance	Landlord policy; add riders for flood/wind as needed
Maintenance	1% of value/year or $1/sqft/year baseline
CapEx	Roof, HVAC, appliances — reserve monthly
Vacancy	5–8% typical; adjust for market

Cap Rate Quick Math

NOI = Gross Rent − Operating Expenses
Cap Rate = NOI ÷ Purchase Price
Example: $2,000/mo rent, 40% expenses → NOI $1,200/mo → $14,400/yr.
$300,000 price ⇒ Cap ≈ 4.8%.

Stress test at ±10% rent and ±15% expenses to see sensitivity.

Turnover & Make‑Ready Checklist

Pre‑schedule paint touch‑ups and deep clean
Swap air filters; test smoke/CO detectors
Photograph every room for records before showings
Update rent comps and marketing copy

Rental Pro Forma Snapshot

Unit: 3BR / 1.5BA  •  1,250 sqft
Market Rent: $1,950
Other Income: $35 (pet, parking)
Operating Ratio Target: 42%

Translate taxes, insurance, maintenance, management, and utilities into monthly numbers so you can compare to rent in the same units.

Red Flags During Due Diligence

Tax bill based on seller’s exemptions you won’t receive.
Deferred CapEx (roof at end of life, galvanized plumbing).
Insurance quotes spiking due to wind/hail or flood zone.

Lease Turn Automation Ideas

Template move‑out checklist with room‑by‑room photos.
Auto‑generated vendor work orders (paint, clean, locksmith).
Rent‑ready quality check with pass/fail criteria.