LANDLORDING 101 – CASH FLOW KAREN RITTENHOUSE
One of my first purchases
was
drive
a
forty-five
from
my
minute
house.
Running by daily to check
renovations,
put
out
marketing flyers, and make
sure lights were off and
doors were locked took too
much
of
my
limited,
valuable time. I decided
never to do that again. After
the third tenant left that
property, I sold it.
Buy homes that have three bedrooms and two baths or larger.
Two bedrooms are much harder to
rent than three. Most of your potential clients will have children, and even single people or couples without
children want extra space. And, it’s hard to find a tenant who is satisfied with only one bathroom. Even single
residents prefer at least an additional half bath for guests.
Make sure your property will provide cash flow of at least $200 per month. Before you purchase,
know all of your costs to own the property and be sure you can get at least $200 more than that for your rent. A
profit of $200 per month won’t make you rich. That money is to cover your costs of owning such as a new hot
water heater, new roof, new carpet and paint when a tenant moves out.
Some investors purchase for equity even if they can’t get enough rent to cover their monthly expenses. They
believe the increase in value over time will be worth it. This may seem tempting but let me warn you, you can’t
eat equity and taking money out of your pocket every single month to cover expenses can stop your business
growth in a hurry.
Don’t buy unless it provides cash flow from the day you purchase.
Never bet on the future. Don’t
buy thinking that rents will go up in the future. They may, but that doesn’t help you out today. Don’t buy because
you think the house will be worth more in the future. Perhaps, but that kind of speculation hurt a lot of people in
recent years. There are plenty of great deals that provide solid cash flow from the day you purchase. If you’re
looking at one that won’t, move on.