How I Make $6,500 a Month with Rental Properties in 2022?
***Disclaimer – I’m not a financial advisor, just a normal guy with financial success. The information shared here is purely for educational purposes only***
Are you thinking about investing in real estates? It’s still one of the best types of investment you can make. Is there risk involved? Sure, like all type of investments, there are no guarantees. But for the smart investors, they do their research / their homework and they run through all the financial numbers to make sure that it makes sense to invest on their target property (s).
Probably no one ever gets everything right initially or on every single property, but hopefully you learn from your mistakes and make better decision the next time around. So how do you get started with investing in real estates?
1. Determine what type of Real Estate Investment
There are many different ways you can invest in real estates. You can buy a property, renovate it and sell, that’s known as a flip. You can purchase a property and rent out as rental property. You can purchase land and build a residential or commercial building on it and sell it as a developmental property, or you can rent them out. You can even do crowd-funding on residential or commercial properties.
So the first thing you want to look at is how much money you can set aside to invest, what type of return are you looking at, and how long you want to hold the property. If you don’t have a lot of money but want to get your feet wet and not having to manage it, crowd-funding is a popular way a lot of investors are gravitate towards.
The advantage of crowd-funding is that you can start investing with relatively little amount of money, but you also get very limited returns. Whereas, if you purchase your own property, you would potentially get a more lucrative returns. I choose to focus on rental properties because they give me solid cash flow and the assets do appreciate overtime. The biggest downside with this is the need to manage it. Rental properties are for the most part a passive income stream, but you do have to do some maintenance with your tenant and asset.
2. Get Your Finance in Order
Once you have figured out how to you want to invest in real estate, it’s time to take action. You may choose to hire a real estate agent and purchase property the old fashion way, or you can purchase properties online through online real estate brokers. Their fees are relatively low in comparison to agents. But you may want to work with a real person the first time around just so you know the ins and outs of this process. Having an agent talk to and answer questions in the beginning will most likely make your first purchase much smoother and prevent and undesirable surprises.
Once you have hired an agent or decide to purchase the property through the broker, you will need to figure out how much you can set aside for real estate investment. You can choose to get a pre-approval letter from the bank beforehand, this will make shopping for investment properties much less pain-free, and allows you to submit a quick offer should you find a desirable property to invest in.
Something to note, investment property financing interests tends to be a little higher than the primary residence financing. The reason being the lender is taking on more risk to finance this to the borrower. The rational here by the lender is that most people will not be willing to lose their primary home so they would try their hardest to make payments on their primary residence. But borrower might be more willing to default on a second home or investment property.
So the lender’s requirement is more strict on a second home like an investment property. You can usually borrow money for 20% down or less, with investment properties, lenders might require 25-30% down. That will of course depend on what lender you go with also. Also expect the lender to charge anywhere from 1.00-2.00% or more interest rate for this transaction.
3. Go and Do It
In order to be successful, it’s important to dream and envision how it’s going to happen. But until you take action, nothing is going to happen. Money doesn’t magically appear in your bank account and property doesn’t magically appear under your name. You will have to go and take a hold of it.
This is how I got started. I started out with researching properties online and saved many favorites, then went back and researched each one that I liked as much as possible. Then narrowed down to a few that I really liked and checked in with my agent, I would ask her as many questions as I could and we would discuss if my plans are feasible in the market that we were in. This was back in 2018 before the real estate mark went berserk.
After I purchased a property I liked, we prepared the property to be rented out. Once some people applied to sign the lease on my first property, we picked one that we thought would be the best long term tenant and had her sign the lease. My first house was giving $1,200 of rent a month. After expenses that includes the mortgage, I was pocketing $600 a month. This house is still my best cash flow and valued investment property. This property’s current rent is now $1,350 a month
After the first tenant settled down, I purchased my 2nd one, rinsed and repeat the process. I was able to get financing for the 2nd one as well and this one gave me $925 a month in rent. I bought a third one shortly and that one gave me around $950 in rent each month. All in all, the three properties gives me around $1,100 in cash flow after expenses while I am slowly building equity in it. All three of them also grew in value by over 40% over the next few years.
I waited about two more years before buying the next set of properties. I bought my fourth property and that one gives me $1,000 of rent each month with another $300 in cash flow after expenses. #5 gives me $1,400 of rent each month and nets me around $500 a month after expenses. #6 gives me $800 a month and nets me around $250 a month after expenses. #7 gives me $1,100 a month and nets me around $350 a month after expenses.
All in all, my total rent revenue per month is around $6,500 and cash flow is more than $2,500 each month. So there you have it, making $30k a year in profit with my seven real estate properties. The plan is to get way more than seven though.
In Conclusion
So that was my story and it’s not complete yet. What will your real estate story be?
***Please feel free to reach out to us at contactus@savingformore.com if you want some free advice on your finance***
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***Disclaimer – I’m not a…