How do you make money with a rental?

Question

If I look for a rental house now, the insurance, tax, and mortgage, all are much more than the proposed rent (not even including fixing/renovation)....this would mean putting in my own money for awhile.......how much is too much to put in? Will I gain in profit because of the increase in appreciation of the value of the house? Do I just keep holding on to it? How do you make money with rentals....if you are putting in so much of your own money tocover the costs of expense? Thank you!!!

Answer 1

Investing in a rental will take a while to make money; it's one of those buy and hold investments. You will take a loss for a few years but once you break even you are good to go and after a few years you will start to get some cash flow. The biggest advantage is that you will enjoy the appreciation of the property and can use the equity to finance others. It really depends on what area you are in. If you buy in a good location such as NYC in 10yrs your property will easily double to triple the value.

Answer 2

Finding a profitable rental home is the key! I look for homes that net me 20% over my costs. There are many creative financing programs..like arms or interest only loans to keep your payments lower the first few years. Here is why I say 20%: I want my PITI covered and then for a good investment, I want 10% for my ROI (Return On Investment) and then I need to add in a 10% vacancy rate because you will usually have a lapse..get the house clean, ready and advertising time needed to fill the vacancy. A good place to start is to find a home with someone going through a divorce or a pre-foreclosure or even a foreclosure. If you have a GREAT Realtor, they can usually put you on an automated search program and you will get the new listings the day they become available. That's the key to finding the GREAT deals..be the first one out the first day to see it and
get it under contract! The best deals sell within the first day or 2.
Another avenue...if you feel you can talk to people..sign up for a free trial of Realtytrac.com and get a list of the foreclsures near you! I think it's free for 7 days, then it's a small monthly fee. You will then need to call these people and see if you can help them out of their current situation of foreclosure. That's a whole nother topic! Hope this helped!

Vicki Watzlawick
Exit Platinum Realty
www.vickisdreamhomes.com

Answer 3

Think about what you just said in your question take that money and put it a saving account you will be better off. Do you relay think that down the road some one els will come along and say to them self hum i want to pay even more out of my pocket to cover this rental? if you can sell that you should be rich and sell some thing els.

Look at he risk do you think interest rates will be the same or even lower in a few years? do you think that rent will increase that much?
If it such a money maker your realtor would of bought it and not put it on the market.

Best of Luck

Answer 4

Go to www.nationalreia.com and find a local real estate investment association. JOIN. Get some education about your LOCAL market. It should be around $50-150 per year.

Most investors in Texas, myself included, are buying properties for 70% of the "As Repaired Value," or ARV for short, less repairs. The debt service on this is much lower than trying to buy at full market value. Add in taxes and insurance, there should be a small ($100-200) positive cashflow. This doesn't happen in every market, and real estate is very local.

Answer 5

There are many ways to make a rental work. But there are many factors involved. If you can answer me : How much it the rental, how much are you putting down, and how long will you keep it then I can teach you how to do it. Visit www.stonesolutioninc.com and answer these for me and I will help you out.

Answer 6

There's a guy called Rick Otton that can show you how to get positive cashflow from day 1. His system is amazing.
Go to www.rickotton.com
Good luck!