![]() That loan allows you to put 20 percent down or sometimes less using the BRRR strategy, house hacking or other low money down techniques. When you buy a rental it is fairly easy to get a loan. That money will come in forever as long as you own the property. ![]() For example, I may rent a home for $1,300, the mortgage is $600 a month, the taxes are $50, the insurance is $75, the property management is $100, maintenance is $100, and vacancies are $50. The tricky part is finding rentals that will cash flow! Here are the advantages of rentals: Cash FlowĬash flow is the profit you make every month after paying all the expenses including the mortgage. The money you make will increase over time because rents will increase, and you will eventually pay off the loan. There may be some months that are negative because you have a vacancy or maintenance is needed, but over the long run, it will keep bringing in cash. I love rental properties because when you buy a good rental it will make you money as long as you own it. What are the advantages of a good rental? I want to buy rentals that will make money every month from the very beginning. I am not interested in buying rentals and hoping they go up in value for me to make money. The market you are in will make a huge difference on if you can buy rentals that cash flow. Although I stopped buying residential rentals in my market, I have been buying commercial properties in the last few years which do make money. There are almost always opportunities to flip houses, but there are not always opportunities to make money with rentals. I have kept flipping houses because the profit margins are still there on the flips. I stopped buying residential rentals in my market because prices increased too much for rents to keep up. This shows how different markets and price points can affect how well a rental property performs. It rents for $1,600 a month and would not make a good rental (if I bought it today). This same property is worth $300,000 in 2019. I could have flipped this house but I chose to keep it as a rental and I am glad I did! ![]() I was buying both, but I had different criteria for each property type. This article uses this property as a case study because at the time there were good rentals and good flips in Colorado. I thought the home would rent for $1,300 a month after we fixed it up. I bought the property in April of 2013, I paid $113,000 for it, and I estimated the ARV (after repaired value) to be $160,000 to $165,000. I first wrote this article just after purchasing my 7th long-term rental property. How does the market affect investing techniques?
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