What makes a good rental property?
The key for any rental property is positive cash flow; a positive or neutral cash flow is what you are looking for. To calculate cash flow, tally up your rental income. Next, tally up your expenses such as mortgage payments, taxes, insurance, and upkeep costs. Subtract your expenses from your income. You want to have something (anything!) left at the end of the day - a rainy day fund, if you will. That way, you can handle unexpected repairs.
As a general rule, it is unwise to invest in a property that has negative cash flow, as with negative cash flow you need to come up the difference out of your own pocket.
There are additional tax benefits to owning a rental property, which can allow you to take a marginally negative cash flow situation and still make it viable. So, a cash-flow neutral or even slightly negative cash-flow situation might be workable depending upon your individual tax situation.
Ultimately, your profit comes from the appreciation of the property when you finally sell.I can help you find positive cash flow situations. Give me a call and we can start the ball rolling.
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Tawana Bourne, SRS, SFR, RESE
Your Enthusiastic! REALTOR®
Berkshire Hathaway HomeServices NEP
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