Rental property numbers

1 Reply

Hi guys I’m located in east Texas I currently have two rentals in Jacksonville. Each one brings in 800/month I’ve had one two years and one for a year. Purchase price for the homes were 57,000 and 59,000, paid for in cash I’m looking for cash flow so I can quit my current job. Problem is home prices seem to have gone up to the 70-90k range and I feel like the most someone would rent for would be 900. I manage my own properties so I’m saving cost there taxes are around 1400/year and insurance is 780 on current homes. I have extra cash laying around and I’m wondering if it would be beneficial to buy homes at a higher price or wait for them to go down or look elsewhere any advice would be appreciated.

@Kyle Tullis The power of leverage. I'll cut and paste a hypothetical analysis I did showing all cash purchase vs leverage. I will give an example. Have $100000 to invest going to use the 1% rule(rent must be 1% of purchase price) and the 50% rule ( half income goes to expenses). Buy 1 house cash or 5 houses 20% down, yes i'm ignoring closing cost. Rent $1000 per month/$500 net for 1 house or $6000 per year. $500 less $430 mortgage = $70 per month net * 5=$350 * 12=$4200 per year. Use 3% rent growth compounded annually for 10 years rents grow to $1344. One house will clear $9128. 5 houses will clear $24840. Yes i know i am ignoring increasing cost. Same 3% inflation for selling = $134400 for 1 house or $672000 for 5 houses. Man those dam mortgages They are paid down to $65073 * 5 =$325365. Equity in 5 houses= $346635. Leverage is power in real estate. Learn to make the money work for you.

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