Advise for first time investor

[Jeff G.]

I have $50,000-60,000 from a stock sale that I looking to invest in a single family home for rental property purposes. In my area the homes that I have been looking at are selling for $120,000 to 150,000 and the typical rents for these houses are $900 to $1100 What I'm looking for is a property that will cash flow and be a good return for my money. I will be talking to my realtor tommorrow but trying to gain some insight on what I should be looking at, any advise would be appreciated.

[Jon Holdman]

Jeff, first, you must learn this business. As Curt points out, those are terrible deals that will not cash flow.

The first thing to learn is that cash flow DOES NOT equal rent - PITI. A better estimate of cash flow is (rent/2) - P&I.

The second thing to learn is the your money should not work for free. Almost all properties will always "cash flow" if you buy it for cash. But its really your cash that's generating the return and not the property.

The third thing to learn is that if "that's the best deal you can find around here", then you shouldn't buy anything. The goal is to make money, not to own rentals.

Read in the Rental Property forum about the realities of rental properties.