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??????????????????????????????????????)????????????????????????????????????????????????????????????????????????????????????()??????((