How do I make a profit?

Question

By the time I pay all the taxes, insurance and interest on loans; I barely make any money. I would like to get help but lawyers and accountants take another bite out of my income.

I am generating good income from my AirBnB and other business (not real estate) but I don't seem to have any money left over. Some days it doesn't seem worth all the extra effort to run my own business.

So how is it done?  What's the secret?

Tyler Gibson · Answer

Increase revenue and decrease expenses. (the secret sauce)

Mary M. · Answer

The elephant in the room that no one seems to talk about - or talk about in a way that makes things worse - the more you leverage an asset the less cash flow you will get. Its simple math.

The popular POV is to leverage as much as possible. This , to me just helps the note holder earn interest and is cash out of your pocket. So, while this may not help the OP I hope it helps others

Dan V. · Answer

@Debbie Tringale Not trying to be biased here, but I think getting help from an accountant might actually help you understand the actual situation of your businesses. What works for others may not work for you or vice versa and your business model may be different from others. You might be generating "good income" which I'm assuming is your "gross income" but that does not matter if your cost and overhead are also high, what matters most are your bottom line (net income) and net cash flow.

$150-200 per door per month may not be a lot for single property, but if you have 20 or more of them, well, that's a different story. And yes you will put a lot of work in the beginning, but later, your properties will work for you. Don't give up, you'll figure it out!

Mary St.Clair · Answer

Depending on the size of your portfolio you might not be taking in huge amounts of cash flow.  Although, one can find a “home run” deal most likely real estate is more of a marathon more than a sprint.  It’s more about the “stack” of properties when you see a bigger cash return.  Unless you are in some bad deals which could be potentially  sink you. I am in SFH or small multi-family homes and I shoot for $200 cash flow a month on my SFH and/or at least $125 on my mutifamily doors and a 10%-12% Cash on cash returns.

Account Closed · Answer

It's one way to buy a property without having to take out bank financing. Use the search bar above for greater detail.

Account Closed · Answer

Your taxes go down when you do real estate properly. I average $500 per property with no operating expenses or capital expenses. "What, You say . . ."

I buy using Subject To, so I don't have bank expenses, I sell to Tenant Buyers who take care of all repairs and maintenance and they give me $20,000 for the option fee. It takes a little to get your head around it but it is explained in a spreadsheet at

Average Turnkey Cash Flow Per Door In Phoenix
Metro Area No Bank Financing Needed

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Phoenix is a little too far for you to be investing, but you can do this all around where you are. Don't give up, try a different strategy.

Debbie Tringale · Answer

@Mike M.  I've read the post several time and I am still unclear what "Subject to" is.

Debbie Tringale · Answer

@Mary Mitchell yes. This is what I am asking about when I said a lot of money is going to interest. The books talk about good and bad debt; good debt generates income and bad debt does not. Well, for me, the interest on the good debt is greater than the income it is generating.

I am beginner and I am learning from my mistakes. I am trying to find that sweet spot where I have more money coming in than going out. Deb

Debbie Tringale · Answer

@Dan V. Thanks Dan. Honestly, I go from day to day thinking I should cut and run or keep going. I have tax and debt problems that are dawging me and I see a large portion of my money going to taxes and interest.

I have been interviewing accountants all year and most can't or won't help me. Today I talked to someone that is willing to help and I am feeling optimistic again.

Thank you for your reply. Deb

Mary St.Clair · Answer

@Debbie Tringale - when I am analyzing a property those are my general rule.  Although, higher cash flow or cash on cash return on the money I have invested is something I am always looking for but in having a set number keeps the emotions out of a deal.  I do have property that brings in a bit higher cash flow and also one that has pretty much an infinite return because all I had to invest was about $1000 for a deposit.  Brandon from BP did a webinar on the “stack” on properties that is helpful in seeing how after accumulating property at the numbers above can bring in some financial freedom once your stack is large enough.   And not to mention or forget, your tenants (if you have the right numbers) are paying your property and building your equity for you.  Which is huge.  My savings account does not do that nor does it yield 12% on my investment.

How do I make a profit?

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