Investor Education - Case Study

[Chris George]

As you can see, I am not quite hitting the 1% rule (purchase price * .01 = monthly rent) but this property is still performing. I work full time in a six figure job, have two of these properties and an 8.5% cash on cash return is solid for me. This return % does not include other benefits such as interest deductions from my taxable salary, appreciation of the underlying asset or the fact that each month I own a little more of the property since my mortgage is amortizing. My accountant also includes depreciation so my annual net income is basically $0. In other words, I really do not pay any taxes on the "dividends" extracted. The big takeaway is for each individual investor to find a return that fits their circumstances. New investors often complain that they cannot find a good deal, but as you can see I made this work for me. I encourage investors to find properties that might work for them and figure out a way, therefore avoiding paralysis by analysis.

Property 2 - 2019 Actuals
Inputs		Monthly	Annual	% of Sales
Rent		$2,075	$24,900
Mortgage		$591	$7,092	28.48%
Landscaping		$50	$600	2.41%
RE Tax		$353	$4,237	17.02%
UPC Insurance		$73	$881	3.54%
Accounting		$35	$425	1.71%
PO Box		$0	$0	0.00%
Repairs	6.00%	$125	$1,494	6.00%
Net Income		$848	$10,171	40.85%
ROI
Cash Invested			$120,000
Cash on Cash Return		0.71%	8.5%
Dividend Split		Monthly	Annual
Chris	75.00%	$636	$7,628
LP	25.00%	$212	$2,543
Total		$848	$10,171