I was sent this link by my brother who is looking to get into the investing world as he gets his first professional job. I currently have 3 rental properties. 2 were planned, 1 was just my old house that I decided to rent rather than sell.
The rule of thumb that I follow (from my mentor) and that seems to be pretty common is that monthly rent needs to be 1% of the total purchase cost, preferably 1.5%. At 1%, your numbers are spot on assuming the property isn’t appreciating. My 2 rentals are closer to that 1.5% though which yields me a yearly profit of 12.7% (assumed 100k purchase) of my investment after factoring in 1.5k property taxes, 10% for the property manager, 1k in repairs, and 1k in insurance.
The first property I got lucky and bought for 60k. It’s probably an 80k house. The rents are on the low end at 600 for each unit (duplex) which at an 80k investment is that 1.5% sweet spot. I’m killing it at 2% with my 60k investment. My other property I just bought for 96k and I plan to easily get 750 per unit (duplex). These properties aren’t expected to appreciate much if any unless I get lucky and the area becomes a hot spot. I’m still seeing 12%+ for personal RE investing rather than REIT. I have a partner to go 50/50 on each house to diversify a little more and we will C Corp each property so they’re paying 15% in taxes on profits. I assume dividends would be taxed at my current tax bracket (30-35%).
Am I missing something or is traditional RE investing more lucrative if you're willing to put in the time? REIT still looks tempting for quickly being able to move money in and out.
Submitted June 14, 2017 at 03:17PM by lod254 http://ift.tt/2tnbHnJ
