Quote:
Originally Posted by HB2HSV
No. The rent is controlled by your locality market so before you buy you will need to get a good idea what it would rent for. I walked away from many good-looking properties because the asking price is too high compared what it can rent out for.
You can do your research through Zillow or simply ask your property manager. He/she should have access to the rental market database.
In general, my quick personal rule of thumb is monthly rent income divided by purchasing price should be greater than 0.8% in today's market. That should get you the ROI in 8% - 12% range.
That is why the rising mortgage rate makes finding a "good deal" difficult. While the rent is capped by the locality, the rising mortgage increases monthly expenses thus reducing the monthly cash flow, making it difficult hitting your ROI target.
Another way is reduce the purchase price but difficult in today's rising home prices.
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This.
General rule of thumb...you can make money in real estate via cash flow or appreciation. HIgher priced properties are more likely to appreicate but can be a double edged sword, because when the market turns, you can take a big hit. The cash flow is in lower end properties relative to investment amount.
Also, a big part of making money in real estate is depreciation.
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