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My rental leases for just under $1400 a month, my mortage which includes insurance, property taxes, etc is around $700 give or take a couple bucks so I'm almost doubling up minus property management fees which are 10%.
I bought a condo to live in and stayed for over 3 years. Now I rent that same place out because I moved somewhere bigger once I got engaged.
Curious to hear everyones thoughts on the following figures.
Mortgage $928/month (includes taxes, etc)
HOA $326/month
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Total Rental Income: $1,300/month
I am really only "earning" around $46 a month not including the equity. What are your thoughts?
Just to clarify this is a condo where I am not responsible for any roof, heater, window repairs, etc. I have not been hit with any special assessments yet and I do trust my HOA board, they are truly amazing. Obviously it scares me being that close. I do think I could squeeze another $50 out of my next renter but I do love my current renter and won't be raising the rent on her under current circumstances.
As a rules of thumb, one might expect monthly rents on a property in a competitive rental market to be in the vicinity of one-half of one percent of what the property could be sold for.
I bought a condo to live in and stayed for over 3 years. Now I rent that same place out because I moved somewhere bigger once I got engaged.
Curious to hear everyones thoughts on the following figures.
Mortgage $928/month (includes taxes, etc)
HOA $326/month
----------------------------
Total Rental Income: $1,300/month
I am really only "earning" around $46 a month not including the equity. What are your thoughts?
Just to clarify this is a condo where I am not responsible for any roof, heater, window repairs, etc. I have not been hit with any special assessments yet and I do trust my HOA board, they are truly amazing. Obviously it scares me being that close. I do think I could squeeze another $50 out of my next renter but I do love my current renter and won't be raising the rent on her under current circumstances.
If you wouldn’t lose money selling it I would probably do so
If you wouldn’t lose money selling it I would probably do so
I wouldn't lose money but prefer to hold onto it, especially since I think the area is going to get hot in the next 5 years or so. It's next to Wrigley Field and my renter has already said she wants to stay a couple of years. She pays all of the bills on it but if I ever run into issues renting it or issues with the HOA I would definitely consider.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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I am about 13% ROI after all expenses paid and my properties are all paid off in full except for two I pulled out cash.
The two I pulled cash out on have an infinite return as with the new mortgages they cash flow about $300 a month each, but when I pulled out the cash I got more out than I had paid into them so I have none of my money into them, got a few thousand extra in my pocket.
Thus no money of mine invested and $3600 a year cash flow on those two. For the sake of numbers I guess you could say I have one dollar invested with a 3,600 ROI
I am about 13% ROI after all expenses paid and my properties are all paid off in full except for two I pulled out cash.
The two I pulled cash out on have an infinite return as with the new mortgages they cash flow about $300 a month each, but when I pulled out the cash I got more out than I had paid into them so I have none of my money into them, got a few thousand extra in my pocket.
Thus no money of mine invested and $3600 a year cash flow on those two. For the sake of numbers I guess you could say I have one dollar invested with a 3,600 ROI
But you would have to earn more money on the equity you took than the interest you pay to have made “pulling the money out” worthwhile
As a rules of thumb, one might expect monthly rents on a property in a competitive rental market to be in the vicinity of one-half of one percent of what the property could be sold for.
I am just learning about rental real estate and recently learned this 1% rule. I'm glad you said something about competitive markets because I live in Seattle's eastside... and 1% on my property would be nearly $7000.. which is just not happening... but $3500... yeah, that's still a little high, but I've seen $3200 or so...
So what kind of markets does the 1% apply to if not places like SF, SEA, NYC or Boston?
Examples:
You pay 125,000 cash for a property. If it's not making 12,500 per year after all expenses you're better off doing something like an index fund.
If I could obtain such a 10% return on an actual piece of property - which besides generating rental income, presumably also appreciates, and offers tax-advantages - I'd dump the index funds, and will become a landlord! However, a more common scenario is...
Quote:
Originally Posted by ChiGuy2.5
I am really only "earning" around $46 a month not including the equity. What are your thoughts?
In a slow market (such as the one local to me), that sounds typical. Locals make money in buying a house, and renting individual rooms to college students, or other itinerants; or, in buying an apartment-complex. Rentals on single-family housing, whether condo or detached, tend to be only incrementally higher than total cost of ownership (mortgage, taxes, maintenance, insurance). A typical occurrence is for the owner-occupant to relocate without selling the house, instead renting it out. The tenant covers the cost of ownership, but just barely.
I feel you should get at least 10% a year on rent. Being a landlord is work. It may not be much work depending on the tenant, but it is still work. You also face certain risks such as a small chance of being sued and vacancy. I know most tenants are fine but you occasionally hear about nightmare tenants.
If I couldn't get 10%, I would rather have my money in stocks. Stocks rise about 10% a year. It is much less work holding stocks, you don't have to deal with tenants and the money is very liquid. You don't have to fix the roof or paint the walls. Your stocks are not going to call you at 2am because a pipe broke.
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