Is buying a rental house worthwhile for $20 a month profit?

Question

It's in the Columbus, OH area. Real estate prices aren't exactly sky rocketing. But, what types of benefits do I get if I buy a rental home and make about $20 profit off of it? If I did this with even 100 houses that is only $2,000 profit a month...excluding any maintenance or repairs. How does one make money in real estate with margins like that?

Answer 1

That's not much profit for today, but what will it be like in 5 years?

If you can raise rents every year, then your profits will increase every year...

I don't know how much you need to put down, and how you're figuring that profit... but, having a positive cash flow the FIRST year of owning a rental property isn't bad at all... if it really covers ALL your costs (taxes, insurance, required utilities, repairs.... etc.)

Also, as the house (hopefully) appreciates over the years, you'll also gain from that when you eventually sell.

I wish you luck, and I hope this helps.

Answer 2

The best way to invest in a rental house is by setting a yield, ie 10% profit after all expenses. If the property you are looking at doesn't match that or at least 8% then it is not worth the purchase.

You should take into account all expenses with the property, from your question it shows that $20 per month profit before maintenance or repairs expenses are taken out. How much do you think repairs will be in a year and the bottom line is $240.00 per year for the repairs and maintenance before you start making a loss.

Answer 3

2

Answer 4

Is that $20 / month after your mortgage is paid ? If it is then
your tenant is buying you a house, and isn't that nice of them!
You only have to worry about real estate prices when you go to sell your house, and hopefully, you will be able to pick a time when prices are up. Prices are cyclical and the downturn
we are currently experiencing is exaggerated because GW chose to keep the economy chugging along by supplying the housing market with cheap money.
The trick to getting rich in Real Estate (or in a lot of other things) isn't really a trick , it's O.P.M. (other peoples money)
None of this is as easy as Carlton Sheets or Glenn Beck make it sound or how they make it look on TV. It does help if you actually possess most of the skills you will need to renovate, repair, and refurbish the units, (and don't mind doing this work for no immediate compensation in your spare time ). Don't think of this as your regular full time job that pays you a salary, rather think of it as a part time job where you get paid by someone puttng money into a savings account that you aren't allowed to withdraw money from , for like 10 years. When you do get a bit of equity built up in the place you concievably can borrow against it , (or sell the house) and take that money and reinvest it (Yes this is risky! If it wasn't everybody would be rich!) and then wealth can begin to mushroom. Hope this helps.

Answer 5

For me that is too narrow of a profit margin. Generally in my area I am cash flowing properties for at least $150 per month per property. I would go down to $100 per month but if it falls below that I don't bother looking.

There is one golden rule I live by when purchasing properties that will be rentals. You make money when you buy the house. Period. Always look for a good deal overall.

Also, remember to take into account all the true values for profit. For example, if your mortgage payment is $480 per month and you rent a place out for $500 you do not have a $20 profit.you have a negative cash flow for that property.

You must take into account all unseen items. Licenses, taxes, maintenance, advertising, vacancies, etc. These all need to be figured in to the price of the rent if you plan on succeeding long term. Not putting money aside for maintenance is a sure fire way to ensure you end up losing money. Roofs, water heaters, carpets, ovens, siding, paint all need to be replaced eventually. If you don't put money aside for that how will you pay for it when the water heater dies or the roof leaks?

Answer 6

Buying and holding real estate is the get-rich-very-slowly technique. Obviously you'l need to select better cashflow properties. Try a duplex to get started.

Only people who've held property for 15-20 years make any decent $$ on cash-flow.

Don't forget the tax write-off with your rental properties. You'll be in the Leona Helmsley tax bracket.

Answer 7

here's the deal,

those people who are on loate at night and say that thye have made all this money with rental are full of bull, i was once a landlord and my margin was right about $10 per month, excluding evertyhing else, vacancy, repairs,

your money you will recive will come in the form of the tax deducion of the interest,a dn the appreciation of the property.

you flat out need to put atleast 20 percent down to make any kind of money.

it's tough

Answer 8

Get the good accountant to get tax refunds, then majority of the investments and negative profit will be refunded (at least it is for Canada). And at the end of it all you will stay with the property that hopefully will grow in price to sell later. And check the regulations, to minimize you lost.

Answer 9

Its not worth it. I work for a law office that foreclose on properties. The housing market will be down for at least 5 years or more. Dont wast your time. If you want to you should buy one and stick with that. The housing market is at its worst. We are taking homes from owners that are not able to pay $75 a month maintenance on million dollar homes. So if you do buy a foreclosure home..remember that debt runs with the land

Answer 10

I wouldn't put up with the aggravation that rental property brings for $20 a month.