Turning a new leaf...

[Alan Hicks]

Alright. Previous tenants have moved out of my rental. Was paying $1150 vs. a mortgage of $941. So not much meat there.

I had 2 options..
1. Double my cash flow by raising the rent to $1350/m

2. Just sell the house

I created my free Zillow listing, had a 3 hour open house and received 8 applications on the first day.

I selected the best applicant and got the lease agreement signed and security deposit on the same day... ALSO.. they signed a 2 year lease.. even better..

Looks like I am keeping it for awhile longer !

So instead of paying $941/ and I paying $1350/m to chop down the balance.

[Nathan Gesner]

Nicely done, Alan.

Just one correction: If you rent something for $1,000 a month and the mortgage is $800, that doesn't mean you have $200 in cash flow. You determine cash flow after paying ALL expenses. This could include taxes, insurance, maintenance, property management, and setting aside money for capital expenditures (roof, furnace, driveway) or vacancies.

As a general rule of thumb, about 50% of your income goes towards expenses and/or setting aside to build a reserve fund. THEN you pay the mortgage (principle and interest). Anything left over after all that is counted as your cash flow.

Based on your situation:

Rent: $1350

50% = $675

Mortgage: $941

Cash flow: -$266

If your mortgage payment includes taxes and insurance, your negative cash flow will be lower than that. I'm not showing you this to insult you. I hope you'll take the time to learn how to calculate good, positive cash flow and make better investments in the future.