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Long-distance (let alone international) RE investement is quite a PITA and unlikely to be worthwhile for you.
Investing $20K/year into a mutual fund is the better way to go, IMO.
Given 4% guideline, $1,000/month cash flow equates to a total sum of $300K. If you put $20K a year into a mutual fund and get an average return of 8%, you'll be at $300K in about 10 years. And the hassle factor will be just about 0.
120k would / should generate 1,000 dollars a month.
People do NOT routinely get 10% ROI being a landlord; if you have studies showing that, please share them.
Look at this article from Money magazine; it shows that for the period of time between 1978 to 2004, housing has turned in an annualized return of 8.6% (commercial real estate has delivered 9.5% in that timespan), whereas for the same time period, major stock market gauges have given us 13.4% returns.
Again, somewhere you can purchase an investment property for $120K generally isn't going to be in an area where rents will trend high enough to give you $1000 free and clear after all expenses.
Long-distance (let alone international) RE investement is quite a PITA and unlikely to be worthwhile for you.
Investing $20K/year into a mutual fund is the better way to go, IMO.
Given 4% guideline, $1,000/month cash flow equates to a total sum of $300K. If you put $20K a year into a mutual fund and get an average return of 8%, you'll be at $300K in about 10 years. And the hassle factor will be just about 0.
It will be worthwhile for me. I do not accept defeat.
10 years for 1,000 a month? Naw, bare minimum after 10 years i'll have 200,000 to invest that should generate 2,000 dollars a month if invested properly.
People do NOT routinely get 10% ROI being a landlord; if you have studies showing that, please share them.
Look at this article from Money magazine; it shows that for the period of time between 1978 to 2004, housing has turned in an annualized return of 8.6% (commercial real estate has delivered 9.5% in that timespan), whereas for the same time period, major stock market gauges have given us 13.4% returns.
Again, somewhere you can purchase an investment property for $120K generally isn't going to be in an area where rents will trend high enough to give you $1000 free and clear after all expenses.
I suggest you head over to BiggerPockets. 10% ROI as a landlord is more than obtainable.
It will be worthwhile for me. I do not accept defeat.
10 years for 1,000 a month? Naw, bare minimum after 10 years i'll have 200,000 to invest that should generate 2,000 dollars a month if invested properly.
I'm going to guess you're about 23. You have the everything will work out so long as you want it enough confidence of someone under 25.
You don't have the experience in the field and you won't be around to personally put in the sweat equity thay may be your only shot at success. Say you buy a new property each year. You're going to fly back to find them or you're going to buy them sight unseen?
Good luck, but I think it's an unneccesarily dumb risk without much chance of success.
I'm going to guess you're about 23. You have the everything will work out so long as you want it enough confidence of someone under 25.
You don't have the experience in the field and you won't be around to personally put in the sweat equity thay may be your only shot at success. Say you buy a new property each year. You're going to fly back to find them or you're going to buy them sight unseen?
Good luck, but I think it's an unneccesarily dumb risk without much chance of success.
I am 28.
I have achieved every goal I set my mind to.
eg eagle scout, top uni, travel the world, etc etc
My traveling the world goal is almost complete and it is time to focus on my next goal of having side income through real estate investing.
I might not have the experience (yet) but I certainly have the knowledge and means to obtain my goals.
I will have 2 months off a year and will come back to the states to evaluate properties until I can find someone I trust to handle those issues.
Uhhh, no thanks; anecdotal social network posting isn't really a reliable source of information. I'll stick with more reputable sources, as well as my real-life experience both purchasing properties for, as well as representing, landlords.
When investors brag about their real estate profits, they almost always leave out the transaction costs. You can't do that. They are enormous in real estate, typically around 10% of the value of the property when you buy and something similar when you sell. In contrast, transaction costs when you buy securities (stocks and bonds) can be as low as zero if you buy direct from the borrower (e.g., the U.S. Treasury) or company (e.g., Apple, Inc.) in question. Since real estate investors typically use leverage (borrowed mortgage money), the amount of the transaction costs can equal or exceed the entire amount of the down payment.
This creates a huge new-car-used-car effect. When you buy a new car and drive it off the lot, it becomes a used car and the resale value drops dramatically. A similar thing happens to your net worth when you buy real estate. If you were to immediately turn around and resale, you would suffer tremendous loss as a result of the buying and selling transaction costs.
When discussing cash flow, investors ignore capital expenditures like replacing a refrigerator or a roof or a furnace. When you ask why they left that out, they'll say, “It’s just a one-time expenditure.” And the relevance of that is what? An expenditure is an expenditure. If it’s a never expenditure, don’t count it. Otherwise, it counts. Plus, when you gain experience, you learn it’s always something. Your first year, let's say, you have to replace a fridge in your rental house. Next year, the driveway is so shot you have to repave it. Year after that, you get the bad news that the 12-year old air-conditioner compressor needs to be replaced. The year after that, the hot water heater goes. Then finally, the next year, no capital expenditures. Hallelujah! Then, the year after that, you need a new roof which costs more than all the prior capital expenditures combined, plus the furnace needs a new combustion chamber. And on it goes.
Most investors and bogus gurus inaccurately calculate cash flow by doing the following:
1. Enter rents for the year
2. Subtract property taxes, insurance, and utilities
3. Subtract mortgage payments
This obviously overstates cash flow by leaving out other operating expenses like repairs, vacancy and collection loss, supplies, gardening, snow removal, etc., etc. And it leaves out the capital expenditures discussed above. There's a HUGE risk element you seem to be ignoring (your tenants could move out and you would have had to eat the vacancy, something could have broken and you would have been on the hook for the maintenance costs, etc etc); in future years you may lose any profits (and more) on these and other expenses.
Leaving out stuff? That is REI 101. You have to account for everything and then some. And when I say everything I mean everything. That is where investors got the basis for the 50% rule.
A forum or person that didn't acknowledge or plan for the above would not garner any credibility nor my attention.
Leaving out stuff? That is REI 101. You have to account for everything and then some. And when I say everything I mean everything. That is where investors got the basis for the 50% rule.
A forum or person that didn't acknowledge or plan for the above would not garner any credibility nor my attention.
Well, then, please educate me as to where in this country you can purchase an investment property for $100-120K, and after all expenses (variable and otherwise) and depreciation and emergencies are taken into account, you will garner a 10% or more year-on-year return based only on the rental income.
Just FYI, I'm not trying to be combative, but you seem to be greatly oversimplifying the numbers involved when it comes to real estate investing.
Your words form your initial post: "My goal is to have a cashflow of 1,000 - 1,500 dollars a month. Just from rent - fixed operating expenses. I will have a separate account for unexpected repairs and potential vacancies."
So you're really looking for a gross monthly income of at least $2500-3000+ (since you want a monthly NOI of $1000-1500). On a $60-100K property? That's just unrealistic, considering the rents you'd likely be able to charge.
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