REI Wealth Monthly Issue 09 | Page 31

LANDLORDING 101 – CASH FLOW KAREN RITTENHOUSE Don’t tie up a lot of cash in a property you’re planning to hold. This is especially true for beginners. As coaches, we recommend that our students flip (resell) any properties they have a lot of cash in, and use that cash from one property to buy several additional properties they can hold. This is a wonderful time to acquire rentals at great prices. When looking at distressed properties (properties that need a lot of fixup), buy those at enough discount to allow for necessary repairs and resell at a discount for quick profit. Recognize that wealth in real estate comes over time. You won’t get wealthy starting out from the cash flow off your rentals. What will create long-term, lasting wealth is having all the mortgages paid down over time (by your tenants), getting the tax write-offs rental properties provide, and increasing cash flow as you owe less year after year while rents continue to increase. What is your cost to own the home? A number of things need to be considered when determining how much rent to charge. Not the least of your concerns should be your costs to own the home. If you haven’t paid off the mortgage, then your goal will be for the tenant to cover all costs to own the house and, hopefully, some extra for maintenance and cash flow. What does it cost you to own the property? Add together your mortgage payment, the monthly interest charged on your loan, your property taxes (monthly), dues for homeowners associations, and any insurance you have on the property (th ????????????????????????????????????????????????????)=???????e??????????????????????????????????????????????????????????????????????????)?????????????????????????????()%???????????????????????????????????????????????????????????????Q??????????????????)?????????????e??????????????????????????????????Q??????????????????????????????????????)????????????????????????????????????????????????????????????????????????????????????()??????((