Nike Sweaters Windbreaker

Even though the actual cash flow from a rental is small, you have an asset that is hopefully slowly appreciation (historically, real estate appreciation has just matched inflation) and is being paid down by the tenants. In 30 years, you have a big asset that you own free and clear. Start now, and buy just one house a year, and in 30 years, you have a nice "gift" every year as you pay these off.

Nike Sweaters Windbreaker

Consider that the total investment you are looking to make is only about $5K, so making $2K per year return is a 40% ROI. Unless you have some great technical skills, it very unlikely you see that kind of return from stocks or other passive investments.

Jon Holdman, Flying Phoenix LLC

First, regarding true cash flow from rentals. You will be doing very well to clear $100 a month per unit. Getting a triplex to generate $3600 a year in true cash flow would be a very nice rental.

So I am asking for some general, philosophical advice.

Nike Sweaters Windbreaker

Nike Sweaters Windbreaker

Nike Sweaters Windbreaker

Be sure you understand the reality of rental cash flow. Read about the 50% rule in the Rental Property forums. That says that operating expenses, vacancy, and capital items will eat about 50% of your gross scheduled rent, leaving the other 50% Nike Red Tracksuit

Nike Sweaters Windbreaker

There are probably dozens of these posts on this site, so I apologize ahead of time.

Use the total amount you have invested to do that calculation, not the loan amount. If you put down 25% (pretty standard right now, doubt you find 10% down), then use the full amount to do the calculation. Otherwise, your down payment is working for free.

In addition, you mentioned that you were concerned about the actual profit being relatively small compared to your income (about $2K per year).

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Advice for Inexperience Investor

as "net operating income". From that you have to make the debt service payment (P not taxes insurance). So, to be break even, the rent needs to be about double the P payment.

like a stock investment would be. This investment is going to take some leg work. So my real metric is $/hr, because I don want to make making a lower "wage" than I do in my day job. Should I just accept this as my education in real estate investment, and not expect huge gains? I feel like I want to take the plunge just so I can get over the nervous nous of owning rentals. Should I be willing to accept this education, even if I lose a little bit of this money?

the basic story is that I come across a handful of low priced du/triplexes in my area. My basic strategy is to buy a property that can maintain positive cash flow. I do not want to depend on appreciation, though I do expect to see some "appreciation" merely because of the deal I am getting.

BUT. Since my wife has recently finished school and found real time employment, we are clearing $110k of income. So, while the ROI looks good, the total cash flow isn a significant difference. We currently have $35k in retirement accounts, but only $11k in cash/stocks(purchased a home and single income for the past 2 years). At this point however, we do accumulate about $4k in "savings" per month, aside from retirement accounts, so while we don have a lot of cushion, we should be building it up pretty fast. Another factor is that I expect inflation to increase over the next few years, and if I buy I want to do it now.

Nike Sweaters Windbreaker

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So, the issue with the relatively small return has nothing to do with real estate per se, but instead has to do with your small overall investment.

Just trying to put things into perspective.

a bit.

So, what I am hoping to invest with is 10% down, while some of the banks I have talked to are asking for 25%. So, we assume I am putting down Nike Sweaters Windbreaker $5000k, I think I can get about $2k $3k of post tax cash flow with the rental rates and expenses I have estimated. So, in terms of raw ROI, this is good property.

Nike Sweaters Windbreaker

Just a couple of quick notes. I write a longer response in Nike Grey Jacket Womens

For someone a couple years out of college, what should I expect or aim for with my first property? I see a good ROI, which may justify the investment vs. putting it in stocks. However, the net income is only a 2% increment in what we make in our occupation. And in the real world this isn really "passive" income, Nike Sweatshirts Green

Nike Sweaters Windbreaker

Nike Sweaters Windbreaker

I am a new investor, and I am looking into buying my first rental property. While I always had my eye out, I hadn really started to consider things seriously until the past week or so.

Nike Sweaters Windbreaker

Nike Sweaters Windbreaker

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