How can i earn from Rental properties?
Member since 2020 · 295 posts · 56 votes
How can i earn from Rental properties?
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Real Estate Consultant · Fayetteville, AR · Member since 2015 · 29 posts · 17 votes
6yHey @Jasraj Singh! Welcome - I'd suggest reading this article to get an idea of how it works:
https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction
43 Replies
- Real Estate Consultant · Fayetteville, AR · Member since 2015 · 29 posts · 17 votes6y
Hey @Jasraj Singh! Welcome - I'd suggest reading this article to get an idea of how it works:
https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction
- Member since 2020 · 295 posts · 56 votes6y
thanks dude! but they are asking me to buy a book??
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes6y
The majority of properties don't pencil out to cash flow every month. When that happens, it just is what it is. You definitely wouldn't make money on that property with those rents. So you have to find properties that do cash flow. What market are you looking in?
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes6y
Originally posted by @Jasraj Singh:
So i was thinking of buying a residential rental property with 4 units near where i live and the seller is asking for $ 4,88,590 and the rent that i assume i’ll be receiving would be $ 876 a month from 4 tenants.
So how can i earn from a rental property? How would i cover the amount of money that I’ll invest? Cause i am investing a lot and I’ll receive very less every month?If you are truly interested in learning how to invest, you need to start by investing in some education.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by @Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control your finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by @Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up.
5. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
The DIY Landlord Book4.7248 Reviews - Member since 2020 · 295 posts · 56 votes6y
Nathan G thanks a lot!
i'll read that book and the guide you've mentioned for sure!
- Member since 2020 · 295 posts · 56 votes6y
Ali Boone thanks for you advice!
I live in India, New Delhi and the cash flow on almost all the properties are very low plus the vacancy rates are also very high so I'm still a little confused but I'll keep looking for better opportunities!
- Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Jasraj Singh:
Ali Boone thanks for you advice!
I live in India, New Delhi and the cash flow on almost all the properties are very low plus the vacancy rates are also very high so I'm still a little confused but I'll keep looking for better opportunities!
Are you speaking US dollars or Rupees? Is the property located in the US or India?
Real Estate is a long term game, particularly rentals. It's still very possible to cash flow throughout as astute investors have.Here is a very basic breakdown ...
Say your property costs $500,000 after you negotiate a price then pay closing costs and agent fees.
Say you bump the rent to 950/month (if you can legally) and have 4 tenants paying this. I personally wouldn't do this deal, because (throwing out hypothetical numbers, % vary based on your income and disposable cash):
Cost: $500,000
Down Payment, 20%: $100,000
15 yr Interest on $400,000, rates for investment property: 3.3%
Monthly Payment for Principal: $2,820
Maintenance, repairs, taxes: $1,000 / month (this depends on where you live)Monthly Income: $3,800
Monthly costs: $3,820
Vacancy Allotment: How fast is tenant turnover? What are the jobs and demographics of area? Is it a hot or cold market at this price point?These are factors you have to take into consideration, and that doesn't include the condition of the property itself. If it's in an area that will experience a lot of growth you could take the risk but as a first time investor, youre losing a small amount of money each month and that doesn't take into depreciation, major repairs or vacancies which can really crush you if you aren't prepared for it.
If you really want this property:
1. Negotiate down price to $450,000 , say it's all you can do
2. Live in the property for a year and get a better financing %, although you lose 1 units rent for the short term you gain a lot long term
3. Walk away. Not every property is a deal, the vast majority are not. - Member since 2020 · 295 posts · 56 votes6y
John collins thanks a lot for your advice and effort!
My property is in india. I converted rupees into dollars to make it easy for the ones who reads.
but how will I get better interest rate by living in my property for a year?
- Member since 2020 · 12 posts · 1 vote6y
The only thing which will make you earn in the rental market is getting things organised. Maintaining your property and Making the complete renting lifecycle organised will definetly make you earn in rental Market. There are many softwares which can help you do it. Like cozy, Sandora, etc
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @Ali Boone:
The majority of properties don't pencil out to cash flow every month. When that happens, it just is what it is. You definitely wouldn't make money on that property with those rents. So you have to find properties that do cash flow. What market are you looking in?
Ali Boone thanks for you advice!
I live in India, New Delhi and the cash flow on almost all the properties are very low plus the vacancy rates are also very high so I'm still a little confused but I'll keep looking for better opportunities!
- Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Jasraj Singh:
John collins thanks a lot for your advice and effort!
My property is in india. I converted rupees into dollars to make it easy for the ones who reads.
but how will I get better interest rate by living in my property for a year?
In that case you will have to speak with your local banks, I don't know the criteria for loans issued in India.
In the US and Europe you get more favorable rates if your income is higher and you are purchasing the home as a primary residence, not an investment property. So when first time investors start out, many of them house hack where they live in a room and rent out the remaining space to tenants. They then move out after a while and go from there.Banks are basically supposed to prefer homeowners over investors ,cash over credit and high earners over low earners . They want to get their money back with interest and will take the best option.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes6y
Have you tried looking in different areas? I don't know what the numbers in India are like, but there are entire countries that typically don't cash flow. Like Canada and Australia just don't have it for the most part, among plenty of others I'm sure. In the U.S. it's city-by-city.
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @Ali Boone:
Have you tried looking in different areas? I don't know what the numbers in India are like, but there are entire countries that typically don't cash flow. Like Canada and Australia just don't have it for the most part, among plenty of others I'm sure. In the U.S. it's city-by-city.
Yaa i have! but I think there's no cashflow in almost all the cities.
But can you tell me the way you look for cash flow and vacancy rates in cities? I mean how do choose where to invest?
plus can you tell me an affordable city in the U.S to invest in? cause I can invest in an affordable city in the U.S
I really need to know
- Specialist · Vancouver, BC · Member since 2016 · 315 posts · 145 votes6y
@Jasraj Singh with $4M US, you can buy a 12 plex in Ottawa, Canada, a 30-plex in Alberta, Canada. And all with better cashflow! The other thing investors get besides cashflow is appreciation and mortgage paydown. In the areas you are looking for, perhaps that is what other investors are doing. Find other investors in India and see what they are doing. Find what other platforms they use. Before you look into investing outside of India, learn about RE investing 'in your backyard'. You might find you don't like it. The other option is to talk to the current owner and see if he will JV or do a VTB with you. Good luck
- Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Jasraj Singh:
Originally posted by @Ali Boone:
Have you tried looking in different areas? I don't know what the numbers in India are like, but there are entire countries that typically don't cash flow. Like Canada and Australia just don't have it for the most part, among plenty of others I'm sure. In the U.S. it's city-by-city.
Yaa i have! but I think there's no cashflow in almost all the cities.
But can you tell me the way you look for cash flow and vacancy rates in cities? I mean how do choose where to invest?
plus can you tell me an affordable city in the U.S to invest in? cause I can invest in an affordable city in the U.S
I really need to know
Kansas City
Midwest towns ... - Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Huong Luu:
@Jasraj Singh with $4M US, you can buy a 12 plex in Ottawa, Canada, a 30-plex in Alberta, Canada. And all with better cashflow! The other thing investors get besides cashflow is appreciation and mortgage paydown. In the areas you are looking for, perhaps that is what other investors are doing. Find other investors in India and see what they are doing. Find what other platforms they use. Before you look into investing outside of India, learn about RE investing 'in your backyard'. You might find you don't like it. The other option is to talk to the current owner and see if he will JV or do a VTB with you. Good luck
It was $433,000 ... not 4 mil. I believe the comma is placed for Indian currency
For that much to cash flow it has to be in midwest or a nice reno that will be hard to find if youre not local without connections
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @John Collins:
Originally posted by @Huong Luu:
@Jasraj Singh with $4M US, you can buy a 12 plex in Ottawa, Canada, a 30-plex in Alberta, Canada. And all with better cashflow! The other thing investors get besides cashflow is appreciation and mortgage paydown. In the areas you are looking for, perhaps that is what other investors are doing. Find other investors in India and see what they are doing. Find what other platforms they use. Before you look into investing outside of India, learn about RE investing 'in your backyard'. You might find you don't like it. The other option is to talk to the current owner and see if he will JV or do a VTB with you. Good luck
It was $433,000 ... not 4 mil. I believe the comma is placed for Indian currency
For that much to cash flow it has to be in midwest or a nice reno that will be hard to find if youre not local without connections
right, that's why I'm very confused cause I don't know anything about the U.S and Kansas City except a little bit about loans but the biggest minus point in India is that there is no 1031 exchange. What do you think about me investing in the U.S in any affordable city cause I 'm definitely gonna need a broker to guide me about the whole place?
plus I also need to apply for jobs I think to build my credit so that I can take loans or mortgage when I need them right? Even though I have some money saved for investing but I think I still need to apply for a job. What do you think?
- Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes6y
@Jasraj Singh Looks like you have a bunch of great responses to your question. This is a great place (forum) to start asking these questions and connecting. To answer your question about a job, having a w2 job does give you some benefits as to what you were speaking of in terms of a loan however most loans require that you be on your job for 2 years as they want to see that stable steady income so that's one disadvantage. One advantage is yes you can become leveraged with a loan and would not have to use all of your money for a purchase. Yes you get more cash flow from midwest markets like here in Kansas City as compared to other markets out east or west because the market is prime for rentals and the cost to entry is way lower. A lot of times depending on the type of property, investors can purchase 2 cash flowing SFH compared to the price of 1 in some other bigger markets. Cheaper to purchase which in return gives you more cash flow due to the rental rates as they keep rising. Also yes u should always get with a local professional as they can help with the purchase, paperwork, finding the right areas and property managers etc. A good Broker/Agent is a vital when investing long distance!
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @Marc Edwards:
@Jasraj Singh Looks like you have a bunch of great responses to your question. This is a great place (forum) to start asking these questions and connecting. To answer your question about a job, having a w2 job does give you some benefits as to what you were speaking of in terms of a loan however most loans require that you be on your job for 2 years as they want to see that stable steady income so that's one disadvantage. One advantage is yes you can become leveraged with a loan and would not have to use all of your money for a purchase. Yes you get more cash flow from midwest markets like here in Kansas City as compared to other markets out east or west because the market is prime for rentals and the cost to entry is way lower. A lot of times depending on the type of property, investors can purchase 2 cash flowing SFH compared to the price of 1 in some other bigger markets. Cheaper to purchase which in return gives you more cash flow due to the rental rates as they keep rising. Also yes u should always get with a local professional as they can help with the purchase, paperwork, finding the right areas and property managers etc. A good Broker/Agent is a vital when investing long distance!
thanks a lot for your advice buddy! but do we really need to check the rental rates of that area in which we are investing? like is it important to check rental rates whenever investing in rental property?
- 6yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Jasraj Singh with that price/remt ratio, it's unlikely it would cash flow. You might want to look at markets with better ratios. The Midwest tends to have better cash flow. I like Indianapolis and Kansas City.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes6y
Originally posted by @Jasraj Singh:
Yaa i have! but I think there's no cashflow in almost all the cities.
But can you tell me the way you look for cash flow and vacancy rates in cities? I mean how do choose where to invest?
plus can you tell me an affordable city in the U.S to invest in? cause I can invest in an affordable city in the U.S
I really need to know
There are quite a few I recommend. Depends on how much capital you have to invest. Indianapolis, Kansas City, Chicago, Baltimore, quite a few cities in Ohio, Harrisburg, PA, Birmingham... Just be sure if you invest here that you are set up properly for an entity and US bank account as an international.
I can't really tell you how to look for cash flow and vacancies in India... you'd have to ask around people there to see if there are any places. Maybe some people are on here and you can put up a forum post asking if anyone lives in India and invests there, and if so, where.
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @Ali Boone:
Originally posted by @Jasraj Singh:
Yaa i have! but I think there's no cashflow in almost all the cities.
But can you tell me the way you look for cash flow and vacancy rates in cities? I mean how do choose where to invest?
plus can you tell me an affordable city in the U.S to invest in? cause I can invest in an affordable city in the U.S
I really need to know
There are quite a few I recommend. Depends on how much capital you have to invest. Indianapolis, Kansas City, Chicago, Baltimore, quite a few cities in Ohio, Harrisburg, PA, Birmingham... Just be sure if you invest here that you are set up properly for an entity and US bank account as an international.
I can't really tell you how to look for cash flow and vacancies in India... you'd have to ask around people there to see if there are any places. Maybe some people are on here and you can put up a forum post asking if anyone lives in India and invests there, and if so, where.
thanks for your advice! ill definitely look into that!
- Member since 2020 · 295 posts · 56 votes6y
Originally posted by @Mike D'Arrigo:
@Jasraj Singh with that price/remt ratio, it's unlikely it would cash flow. You might want to look at markets with better ratios. The Midwest tends to have better cash flow. I like Indianapolis and Kansas City.
Completely! can you suggest me what kind of job can I apply for in the U.S because I think I first need to build some credit so that I can use loans or mortgages for investing?
- Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes6y
@Jasraj Singh Yes rental rates are important when calculating your return on investment. The rental rate is not the end all but it does help to have a round figure when running numbers. Along with other things such as you mentioned vacancies, maintenance and property management.
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