how to quickly profit from rent ?

Question

How people are investing in todays market where rent doesn't cover mortgage payments? ... No matter where u buy the house u cant rent it for more than mortgage payments...It means I have to be in minus to keep up a property and a tenant, even assuming I put 20-25 % down .Why so ?

In what states mortgage payments are gonna be lower and rent high so that investors would get profit from the first month if it still exists ?

I cant figure this out, plz leave your opinion and advice, i highly appreciate it!!!

Bill B. · Answer

Or maybe there’s inflation in the future and rent increases yearly faster than taxes/insurance. You aren’t supposed to “get rich” on the rent during the first few years.

Ps. 99% chance you’ll find 20 years from now that your appreciation gain is worth 10x your rental income. Put down 20% and “break even” for 30 years. Get “unlucky” At 2.4% inflation/appreciation you have a 900% return when it’s paid off. “Get lucky” and get 4.8% for an 1800% return. Even if you did pick the only place on the planet with zero rent appreciation for 30 years. As I’m sure you can point out all the places where rent today is the same as 30 years ago.

Of course maybe the most efficient government on the planet has fixed inflation by the time I post this.

Chris Seveney · Answer

@Kelly Williams

You need to put a lot more money as a down payment if you want it to cash flow

Or maybe now is not a good time to buy real estate

Barry Ruby · Answer

@Kelly Williams

We are in a period where negative leverage exists

This occurs when interest rates are higher than cap rates

Alecia Loveless · Answer

@Kelly Williams If depends on the location you’re buying in. And what type of asset you’re buying. And how you’re buying it.

I just watched two lovely rent ready SFHs in my target market sell for around $160K. They didn’t cash flow at all with a mortgage until you maybe put 50% down but if you paid cash you would have cash flowed close to $700/month apiece. Unfortunately I’m not a cash buyer at the moment. Both sat on the market for over 6 weeks.

During the past 6 months I’ve bought an 8 unit with a 6.875% rate 25% down that has about $3000 cash flow/month and a 5 unit with a 7% rate 25% down that will cash flow $2000/month. Both are after accounting for mortgage, bills, CapEx, maintenance, and vacancy.

This may not seem like great cash flow to everyone but in my area it is stellar!

Bob Stevens · Answer

You are NOT finding deals. Of course, the rent covers the note PLUS positive cash flow. I just picked up 7 more, all under 100k, all with rents from 1100- 1400. All net about 800 per month.

ALL THE BEST

Bob Stevens · Answer

Find better deals. , All my rentals are never less then 15- 20% net caps based on cash purchase. Even if I used a loan, I would still have positive cash flow,

Mohammed Rahman · Answer

Hey @Kelly Williams - I have a few videos about this on my social media as well as some blog posts.

NYC is not a cashflow market, neither is any high cost of living city (LA, SF, Seattle, etc.)

Even with conventional downpayments of 20-30%, most of my clients see cashflow around years 3-5.

James Hamling · Answer

Makes me wonder, has ANY Gov. ever "fixed inflation"? Assuming we use "fixed" in terms of repaired, not set-via-regulations as done in WWII and Nixon.

When I search guess that I find, China, yes CHINA as doing oh-so-great on inflation, lol. Soooo all we gotta do is let the communist's take over, rule with an Iron fist and shazam, inflation is fixed.... lol.

James Hamling · Answer

I calculate DSCR to asset/operational class. In AAA we go to the lowest threshold of 1.0. From there I go/require up to 1.45+ DSCR.

Anyone doing under 1.0 is nutz in my opinion. There is simply no reason for such. And darn good reason won't find a lender who'd accept anything less than 1.0.

James Hamling · Answer

@Kelly Williams how many would you like? 5, 10, 30 SFR's? Ok, done!

Seriously, I don't know what your talking about because I can buy SFR's all-day every-day right now where yes, 100%, rent's will absolutely cover your PITI.

Net-0 on PITI is a really low bar to meet, in my world at least.

Now if you said I needed to facilitate no less than $2m per week in acquisitions of such, every week, for next 3-Q's+, ok now that may start getting difficult, keyword "may".

So either I am in the market under the rainbow, or, and what I suspect is more true, you're just not correctly looking for performing properties/markets.

The only time I run into any issue where we may be in the red at start as in yr1, is when doing a very specific strategy of AAA, which is focused on appreciation anyways. It's with new built A+ grade properties in A+ areas with A+ tenant base. Those, sometimes, after ALL allocations, can be pre-tax just under net-0 yr1. But even those post tax are a net-+ given the tax benefits to those investors who are all-but universally high income earners because again it's a strategy focused for significant appreciable gains.

What your saying here is patently false, because here I am saying I can do properties all-day-long that meet this very low threshold of meeting and exceeding PITI at 20%+ down, no problem.

how to quickly profit from rent ?

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