Rental Property Question

[Rhys Massengill]

I am new to real estate investing and haven't set up good marketing strategies to generate any quality leads for good deals. I have found some properties that I estimate could cashflow me about $200-300 a month as rentals after all expenses have been paid. However, I'd be paying close to retail price for them. Is this a good idea to buy for the cashflow or should I try to find something better under market value? Thanks!

[Amber Gonion]

@Rhys Massengill we typically see the cash flow you are looking at after all expenses, Timmur taxes, insurance, management, maintenance, utilities, and repairs. We also include set asides for appliances and hvac, and another set aside for the next rehab in 20 years.

We look at wealth generation through cash flow, appreciation, and principal pay-down. The real wealth earnings are through the last two, cash flow is nice, but can be eaten up quickly by surprises and is taxed at the rate you are paying taxes at right now rather than at retirement rates. If you do the math and look at historical appreciation in 30 years I could have a property that broke even the entire year and be really happy with my return. Even if they appreciate at the inflation rate, you still would have principal pay down of the entire balance and be happy.