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Is Owning a Rental Property a Good Idea Even with Negative Cash Flow?

NEW UPDATE: We already stated that owning a rental home is a great investment. 20% return after taxes is possible with with professional property management and all expenses covered.

But what if the numbers get really bad? is it still a good investment?

Hint: Call Real Property Management Rio Grande… 505-225-2812.   https://www.rpmriogrande.com for the answer

Simple math hypothetical example (all numbers for example only):

165,000 home in Albuquerque

30000 down payment

monthly payment on 30 year mortgage at 5.5% (not a good mortgage today) 

$200 taxes and insurance

Rent is 1150. BUT we’ll add 10% vacancy to make it worse

Property Management Fees are 115 per month.

expenses for the property (repairs, maintenance) are 1700 per year… but lets add 50% to that and make it $2500 per year. 

We’ll say the rent only goes up 1% per year vs 3% planned

We’ll say Values only go up 2% per year vs 3-5% planned

your cash flow is now  -250 to -300 per month… tough to handle I know.

But your ROI on the initial 30000 is still 4000-4500 per year after taxes.

>10% return with very bad numbers, vacancy, overly high expenses, etc. Not too bad

more details on returns

http://www.goodmortgage.com/Calculators/Investment_Property.html

Note: if you don’t use professional management, you wont get the rent, appreciation, or protection of your investment that you deserve!

Mark

Real Property Management Rio Grande

www.rpmriogrande.com

505-225-2812 Cell

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.