Looking to buy first rental in the next 3 years

[Christopher Sparacino]

Hi everyone, I dont usually post here but I figure I would now to get some advice, like the title says im looking to buy my first rental within the next 3 years, (maybe sooner if i can start closing wholesale deals) but I was just curious, what are you looking for that makes a deal?

For me, ideally I would like to spend $100k and make back $1000 in monthly cash flow from a property, is that possible?

Also for appreciation/depreciation concerns, i know I need to be where there is jobs and population growth, any other tips?

And how does compound interest work in real estate investing, if at all...

Any other tips you could throw my way would be great.

Chris 

[Josue Vargas]

@Christopher Sparacino

What type of REI strategy are you looking at?

Basically you need to run the numbers taking in consideration all the costs, for example for buy and hold strategy you need to consider things like property taxes, interest and principal, repair costs (if any), Mortgage closing costs, any paid utilities by you, insurance, maintenance, CapEx, property management (if any), HOAs, and vacancy, among other costs.

This is for Hold and buy only using your numbers: spending 100K and 1K monthly cash flow would be like a ROI of approx. 20% and Cash-on-Cash ROI of 230%. With your $100K, you need to collect approx. $2300/monthly rent to meet the $1000 cash flow. Not realistic. Something realistic to very good would be like a 8-12% ROI. At 10% ROI, your cash flow will look something like $320, assuming low property tax and a tenant that is able to pay $1400 monthly rent. You really need to find a good deal to meet these numbers, so that strategy may not work for you.

I would suggest upgrading to BP Pro and start running the numbers in the available calculators.