How can i earn from Rental properties?

Member since 2020 · 295 posts · 56 votes

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?

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Noah Brinker

Real Estate Consultant · Fayetteville, AR · Member since 2015 · 29 posts · 17 votes

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

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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Marc Edwards:
@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.

thanks! but there are a lot of formula's. Can you tell be one which is better to calculate the rental ratio or cash flow?
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Marc Edwards
Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes
6y
@Jasraj Singh You are correct there is a lot of different formulas.There is a calculator section here on biggerpockets tht you can use for free a couple of times. There is one for rental, fix and flip and brrr strategies. Everyones strategy is different and everyones goals are different when investing. The basic cash flow calculation is = Rent income less vacancy loss less payments less expenses equals your cash flow:(gross rental income) less (vacancy factor) less (mortgage, taxes, and insurance) less (repairs and costs) equals your cash flow.
So you take your rent monthly and add by 12(months) to get your yearly rental income then do the same for all your expenses add them up then subtract all your expenses from your rental income amount.
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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Marc Edwards:
@Jasraj Singh You are correct there is a lot of different formulas.There is a calculator section here on biggerpockets tht you can use for free a couple of times. There is one for rental, fix and flip and brrr strategies. Everyones strategy is dibutfferent and everyones goals are different when investing. The basic cash flow calculation is = Rent income less vacancy loss less payments less expenses equals your cash flow:(gross rental income) less (vacancy factor) less (mortgage, taxes, and insurance) less (repairs and costs) equals your cash flow.
So you take your rent monthly and add by 12(months) to get your yearly rental income then do the same for all your expenses add them up then subtract all your expenses from your rental income amount.

Completely! But isn't it just like NOI? income minus expenses?

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Marc Edwards
Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes
6y
Correct !!
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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Marc Edwards:
Correct !!

thanks a lot buddy!
appreciate it!
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Marc Edwards
Real Estate Agent · Blue Springs, MO · Member since 2015 · 104 posts · 49 votes
6y
My pleasure !!
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Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Jasraj Singh it doesn’t look like rent will cover expenses. This is a cash flow negative deal.
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William Watt
Investor · Semmes, AL · Member since 2017 · 17 posts · 7 votes
6y
You might think of other real estate investments. I like the true RV camper parks (for tourist and not local low life). May be close to the coast line like the Gulf of Mexico (Florida, Alabama, Mississippi, Texas). Your investment will be quite a bit less as you are paying for real estate and infrastructure (sewage, water and power) which can be done as the business grows. You will need some construction experience to keep your expenses down. Of course it would be great to have an endorsement from folks like KOA or other RV clubs but not require if you advertise.
I like places like Tallahassee, Port St. Joe (both in the Florida pan handle) as they are not far from Atlanta as your repeat client base. Not to far for the wife and kids to come in the summer and dad comes on the week ends. For the winter all of the Snow Birds will come.
It may be difficult to purchase and existing camp ground as they are such good money makers they are generally kept in family hands.
Good luck in your search but might think out of the box a little.
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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Matthew Irish-Jones:
@Jasraj Singh it doesn’t look like rent will cover expenses. This is a cash flow negative deal.

that's what I was a little confused about! but if I buy a property for lets say $200000 and I made a down payment of $40000 and I make and $5000 for closing costs. so total I have invested $45000 and I earn $2100 from rents and I have monthly expenses of1800 so I have a cashflow of $300 a month. So I want to ask that wouldn't it take a lot of time to earn from rents even if I want to cover the down payment I paid for $40000??

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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @William Watt:
You might think of other real estate investments. I like the true RV camper parks (for tourist and not local low life). May be close to the coast line like the Gulf of Mexico (Florida, Alabama, Mississippi, Texas). Your investment will be quite a bit less as you are paying for real estate and infrastructure (sewage, water and power) which can be done as the business grows. You will need some construction experience to keep your expenses down. Of course it would be great to have an endorsement from folks like KOA or other RV clubs but not require if you advertise.
I like places like Tallahassee, Port St. Joe (both in the Florida pan handle) as they are not far from Atlanta as your repeat client base. Not to far for the wife and kids to come in the summer and dad comes on the week ends. For the winter all of the Snow Birds will come.
It may be difficult to purchase and existing camp ground as they are such good money makers they are generally kept in family hands.
Good luck in your search but might think out of the box a little.

sounds like a nice idea.But I don't live the U.S and I want to invest there and I am figuring out how to invest there but thanks a lot for your advice! really appreciate it!
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Alleia James
Accountant · Chicago, IL · Member since 2020 · 62 posts · 23 votes
6y
Hi Everyone!
I am also new to real estate investing and the BP community. Any tips for a Chicagoan looking to purchase a multifamily property? I'd love to hear about anyone's experience, do's and don't, etc.
Warmly,
AJ
1 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Jasraj Singh Yes you are exactly right, it takes a long time to earn a profit from RE investing, and you generally speaking need a lot of Capital to grow.
You have to look at it like an investment. What % return are you going to earn on your investment? If you are getting a 12% cash on cash return you are doing pretty well. Especially when you include debt pay down and appreciation, assuming there is some eventually.
You really need to get good at calculating these numbers and analyzing deals. That's the first part of becoming a good investor.
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Tim Hall
Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes
6y
@Jasraj Singh hey there hope you’re well. Do not think that there are rules to renting or being a landlord, there isn’t. Do not over complicate things.
A deal is not a deal if you don’t make any money, period.
A person can ask what they want for a property it does not mean the property is worth what they are asking.
There are properties out there that you can make money on every month. You just have to put effort into finding them. If you immerse yourself in the business and see many many deals one of them will come along that you can’t say no to. Be patient and it will come.
1 Reply
Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Matthew Irish-Jones:
@Jasraj Singh Yes you are exactly right, it takes a long time to earn a profit from RE investing, and you generally speaking need a lot of Capital to grow.
You have to look at it like an investment. What % return are you going to earn on your investment? If you are getting a 12% cash on cash return you are doing pretty well. Especially when you include debt pay down and appreciation, assuming there is some eventually.
You really need to get good at calculating these numbers and analyzing deals. That's the first part of becoming a good investor.

That's a really good advice! Do you know any courses online where I can learn about analyzing deals?

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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Tim Hall:
@Jasraj Singh hey there hope you’re well. Do not think that there are rules to renting or being a landlord, there isn’t. Do not over complicate things.
A deal is not a deal if you don’t make any money, period.
A person can ask what they want for a property it does not mean the property is worth what they are asking.
There are properties out there that you can make money on every month. You just have to put effort into finding them. If you immerse yourself in the business and see many many deals one of them will come along that you can’t say no to. Be patient and it will come.

Thanks a lot! I really appreciate it! but what I meant how can someone earn from cashflow cause like I bought a property and I spent $45000 on down payment and I am renting it for $1200 a month and after all the expenses now the cash-flow is only $300 so what I meant was wouldn't it take a really long time to earn from it and even cover the down payment that I've invested in the property. So that's what I was a little confused about! but thanks a lot for you advice! appreciate it!

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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Alleia James:
Hi Everyone!
I am also new to real estate investing and the BP community. Any tips for a Chicagoan looking to purchase a multifamily property? I'd love to hear about anyone's experience, do's and don't, etc.
Warmly,
AJ

Hi, I suggest you to read blogs and articles about it and you can find a lot of it for sure or you can start a discussion about this topic so that you can get to know what you want to know about and you can get a lot of suggestions this way!

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Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Jasraj Singh Everything you need is right here on Bigger Pockets and most of it is free. I would recommend starting with some of the BP books they have for sale. Its also a nice way to support the site. There is tons of free info here from other investors, calculators, books, webinars, etc... Read all of them. Calculating deals is fairly straight forward once you know the basics.
Irish Jones Realty4.947 Reviews
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Jasraj Singh
OP
Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Matthew Irish-Jones:
@Jasraj Singh Everything you need is right here on Bigger Pockets and most of it is free. I would recommend starting with some of the BP books they have for sale. Its also a nice way to support the site. There is tons of free info here from other investors, calculators, books, webinars, etc... Read all of them. Calculating deals is fairly straight forward once you know the basics.

Alright! thanks for recommending!
I'll try and read blogs related to rental!

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