New here, seeking advice!
Hello, I'm just starting my journey into real estate investing, my current deadline for myself to actually start is next year so I'm trying to cram as much information as I possibly can.
One thing I cannot find though is how to turn a profit on renting real estate with a mortgage using a 20-25% down payment. I've been playing around on Mashvisor, using their calculator I can't seem to find a way to bring in monthly profits on a mortgaged rental property.
so I guess my question is, what's better? Buying with straight cash or using a lender? If using a lender how do you turn a profit? Is it a matter of negotiating prices or interest rates? Any information is greatly appreciated.
The first question and I think the most important question I need to ask you is where are the houses that you are using to do your calculations located?
If they are in your home states of Cali. Then uh yea, makes sense why you are not seeing profits on mortgaged rental properties. Your housing market is insanely high and so are your property taxes. How can any Joe Schmoe investor be able to turn profit with such a competitive market.
My second question will then be, Have you tried out of state rental properties? If you did, you will quickly realize how much more profitable out of state investments are.
It would be nice to buy rental property straight cash but then you are tying up all your capital into one property. If you leverage it, you can have multiple cash-flowing properties.
@Andrew Sweeney even with an appreciation play. and a $100000 to invest. I just read that the bay area growth has slowed to 5%. Buy 1 house outright and at the end of the year 10 it is worth $163000. Control 5 houses with 20% down. $80000 mortgage in 10 years the payoff is $65000. $163000-$65000= $98000 x 5= $490000.
I started with out of state, I haven't searched California yet. The places I started in were Fort Worth TX, Ohio, and Salem, OR. I know that I could have been searching wrong, and that there are more things to consider than just what a site says.
@Tim
Yeah the housing here has slowed down a bit, but it's also way too expensive for my taste right now for starting out. I was playing around with calculations and with a 25% downpayment for 30 years, and even 15 years everything I checked produced a negative cash flow of up to -$300.
I want to thank you both for your time, I do appreciate your advice and any advice at all!
This really is something I want to give a shot. I've been going into it the past few years, finally working up enough money to put down a down payment but I couldn't really find an answer on if I should use mortgages can produce a positive cash flow or I may have just been missing it lol. Thank you guys!
It's going to be about location. More properties than not won't cash flow with a mortgage (and just to be clear--just because a property will cash flow with more cash down doesn't mean it's a deal... you can make any deal "cash flow" with no mortgage).
Where in Ohio did you look? Ft. Worth and Salem aren't going to offer much cash flow. And what kind of properties are you looking at? How nice, what price range, etc.?
@Andrew Sweeney it sounds like you may just need to continue analyzing deals and honing your skills because I see deals all the time that positively cash flow with 25% down. Maybe look in different markets and/or keep searching for better deals. The more properties you analyze the more it will start to make sense. I definitely recommend using the bigger pockets calculators under the tools tab. It's a phenomenal resource and I know there are tutorials throughout the website that will show you how to use them. I just searched for a second and found a couple. Here are the links. I know there are more as well. Just stick with it and keep crunching numbers. It will start to make sense if you keep at it. Best of luck to you. You got this!
https://www.biggerpockets.com/videos/how-to-analyz...
https://www.biggerpockets.com/videos/how-to-analyze-a-fix-and-rent-property-biggerpockets-brrrr-calc