Question for those who invest in real estate for rental income.
 

Ok, this is more for those that invest specifically for income from rentals. I know real estate value has been going up consistently but lets ignore that for a second.

How much rent do you expect per month for each $100,000 invested? Thanks if anyone cares to answer.

For those answering... make sure to factor in maintenance costs, taxes, and other ancillary costs as well.

I would think its highly dependant on the area and even more specifically on the individual real estate investment. Sorry I can't help you out more, I'm trying to learn the ropes as well.

More people probably look at it in terms of profit above the mortgage costs

It really depends on the area your in, Im in NJ and have rental properties that i bought before the boom. The properties have more than doubled in price, while rents have stayed low. With inflation and higher interest rate rents tend to go up, so this is actually not a bad time to be a landlord with rates going up and the same with inflation. I make about $500 profit per property per month, i put $30k down on each house when i purchased them.

Hope that helps some

Everyone's answer will be different and none will be of any use to you. Too many variables.

True. Very location-dependent.

Never fails on this board. Of course answers will be different but ALL of it will be of use to me. Thanks for your insight though! :thumbsup

Using your numbers for per 100k.
I typically would expect 1300.00 in total rent per month. Of that roughly 15% will go to property tax, maintenance, possible vacancy, and the like.

Though I also do not play much with house rentals and just deal with mobile home rentals on individual plots (non parks). Much easier to make money with in my opinion.

ancillary.. nice.. I learned a new word today.. Thanks.. :thumbsup

Thank you sir. :upsidedow

If you do actual houses you will get less rent per 100k.

Around here for example an average 2 bedroom house with small yard would cost you 250,000.00+ or so. (plus higher property taxes etc). You would be hard pressed to get much more than 800.00 a month for it, 1000.00 tops and we lack rentals in our area.

Now the average 2-3 bedroom mobile on its own property with small yard would cost you about 60,000.00 to 70,000.00 if it is non distressed when you get it. With these you can easily get 650.00 to 700.00 a month for them.
Mobiles themselves can also be depreciated come tax time, though the land is seperate. As long as you do not sell the mobile it is another advantage.

With one house: 9600.00 yr.
With one mobile: 7800.00 yr.
With same value in mobiles less 10k (240k): 31,200.00 yr.
Then with the 4 mobiles is is near impossible to have all four vacant for a month thus making it easier to cover the mortgages, unlike a house.

Check your email, Morten :) :thumbsup

What was the price of each house that you put $30k down on?

If you live in a tenant friendly area i would watch out. The only way to get those no paying cocksuckers out would be to burn the place

Yep, plus rent control can be a bitch in some areas.

Here is a good way to start. Figure out the cost of the mortgage, and upkeep figure in 10% and you are set.

DONT get greedy. You make more with 5 properties bringing 10% each, than 1 property at 30% and the other 4 sitting empty because you can not rent them.,

you also dont want to charge too low or you will attract scum into your property

Very tenant friendly state myself. People must learn the processes and laws inside and out. You can not be nice, you can not be lax, you can not give breaks.
If they are even an hour late with the rent you must get the legal process rolling.
Stay on top of everything, document everything, do everything in writting, and video tape the property all the time. Take full advantage of your walk through abilities and do them. Hint property management firms do not care nor do this really at all.

my parents have owned homes and rented to many many people.

imo if you just bought then expect it to take about 5 years before the rent you get breaks even with the mortgage.

Also if youre going to buy, youre better off buying at least a 3 bedroom and at least a 2 bath.

If you get a 1 bedroom then you tend to get transient people who arent stable in life. We've had to go to court a few times from the single guys who rented a bedroom and turned out to be scumbags.
One started a fire in my house.

If you get a 1 bath then if theres a problem with the bath you have to go right away or get a plumber who will charge you more to come out at night or weekends.
if you have a second bath it can wait until the next day.

if you want a BIG money tip, buy something that is all 1 level and handicapped and wheelchair accessible.
Like a ranch with no stairs, or small stairs where its easy to put a ramp in.

You can rent it out to a special needs facility like a school for handicapped people and they can pay big money. A family member paid off a house in 9 years from leasing out her ranch to a school for handicapped people.
She just did another lease with a different facility and is using that money to buy her another home.

Either that or get a nice townhouse and rent it out to a corporation for their upper management to live in while in town.
Big money in that too and good quality people.
We dont rent to the public anymore, way too many problems.

Mortgage.
Insurance.
Property tax.
Maintenance/upkeep.
Vacancies/no rent collection during legal process.
Legal paper work/costs.
For some, property management fees.

Very informative post as always, ASM. So true.

Strange I thought it was the other way around.

Have rental properties to pay mortgage on other properties.

Maybe I should call my financial advisor a kook?

where can i move and do that?

lol. Thats not realistic
youll be calling your lawyer every 30 days if you did that, at $250 a pop.

shit happens and sometimes people are a few days late. You dont throw someone out over that. you charge a late fee if its been over a week and tell them not to let it happen again because you dont want to have to chase after them.

If you are in PEI it must be a very unique market there. I remember when we were there in the summer noticing how LOW the values of properties were.
Anyways our formula is to only buy cash flow positive properties (after paying everything including interest & principal on the mortgage), even if the cash flow is small, i.e. $300/month. The purchase price is almost always 9-10% of Net income, and the ROI is usually around 25% per year (this includes the $ paid towards the mortage principal remember that is all income) Hope this helps a little.

dont forget the cost of repairs. if the legal process is started, expect atleast $10k in damages. i actually had people cut a hole in the carpet, build a brick fire pit and start a fire on the living room floor during the eviction process because their utilities were cut off and they had no heat.

Thanks.

Something people must often keep in mind. Tenants do not like landlords. They do not value your property. They do not care about your bills, and often they think you are taking advantage of them by charging them what you must. They have zero thought on how much it costs you and they just see you as an unfair bill they can often put off every so often. That you are required to take pity on them when shit happens.

Biggest tip I can possibly give, is give your tenants an incentive to pay early and if your legally allowed fine them for being late. A tenant will often really try to pay early if there is a cash break on the rent if paid in full early.

We give all tenants 1 day, after that they get an N5 form: pay up in 14 days or get out. If you leave it for one week they will just do it again next month, and the month after that and always be late. We have a zero tolerance policy for late rent. We do the forms ourselves and go to the Rental Housing Tribunal ourselves so the fees are relatively low. (Ontario laws) 3 Late payments in a row and we just kick them out for persistant late payment of rent.

You do not need a lawyer to start the legal process. It is a super simple process and very easy to serve them with a 3 day pay or quit notice (vaires by state). If they pay then they also cover the cost to serve them (assuming you had a cost).

Shit does happen, though other peoples problems are not mine to take on. The people I pay bills to will not give me a break when I tell them my renters have not paid me yet. I charge a late fee when the rent is 1 day late and interest begins at the same time, yet legal process also begins.