Quick rental investment question - New investor

8 Replies

In my area, after putting 20% down, I will have zero cash flow.

My question:

The goal of a rental property is to put 20% down and have the mortgage paid off by tenants after 30 years.

After that, I can sell or just have positive cash flow for retirement.

Is this correct?

Just wanted to make sure I was clear on the objective.

Thanks!

There are as many goals with rental property as there are investors.  What you have outlined would be one.

Most people, however, would much rather have cash flow from day one, rather than waiting 30 years.  Others want to pay down the mortgage as quickly as possible, so they pay more than the minimum towards the mortgage.  It really depends on your style and what you want to do.

Medium cluebussol logo3inLinda Weygant CPA, Clue Business Services, Inc. | [email protected] | Podcast Guest on Show #244

@Jonathan Pockets really then you would want to look for deals that would cash flow with the financing you want. Keep in mind that if you are purchasing in the name of an LLC for asset protection, most likely you'll have to get a commercial loan, so the terms there are usually 25% down for 20 years. That really crushes cash flow!

My goals are the same as yours, plus cash flow of at least several hundred dollars per month. If I lived in your area, I would consider moving and/or investing elsewhere.

You need cash flow. You will have maintenance costs, vacancy etc... You should aim for $100-$200 a door minimum. Good luck!

Those goals do not meet my goals. My target is to be able to purchase a property that will cashflow at least $100 a door by financing the total purchase price on a 15 year note. I will then fix up the property and improve to create equity usually 30% within the first year or two. Upon completion of work.

That goal is good, but I'd add to it having additional cash flow after the mortgage payment to add extra cash to your pocket! And cover expenses. Ultimate goal- no expenses to you (tenants cover) and you end up with extra money in your pocket each month.

Medium hipsterinvestment logo black300dpiAli Boone, Hipster Investments | [email protected] | 310‑957‑2101 | https://goo.gl/x52ZKJ | CA Agent # 01911993

Gotta have cash flow.  1.  Be patient and make offers.  2. Always refer to #1.

K, thanks for all the replies!

Is everyone getting cash flow from buying the properties cheap or just a larger down payment?