We are taking an objective look at what makes a rental property a good investment and are analyzing a six-unit residential property I have for sale on Randolph Street in Napa, California as an example.
In part one, we found how income determines the value and placing too much significance on appreciation may prove to be speculative. We then briefly discussed determining gross operating income.
Let’s discuss operating expenses and how financing fits in? Then we will wrap up with a discussion of cash flow and a few key financial indicators in part three.
Randolph Street expenses
In part one, we found the annual gross operating income (GOI) to be $120,840. In analyzing whether this property is a good investment, we subtract the expenses it takes to operate the property.Read More