What is decent monthly cash for for a rental property for a real estate investor is the question this week for Ask Landlord Hank. Remember Hank is not an attorney and cannot offer legal advice. If you have a question for him please fill out the form below.
Dear Landlord Hank:
What is a decent monthly cash flow on an investment home for rental?
-Mitchell
Dear Landlord Mitchell,
That is a tough/easy question and very individual.
Your face can tell you the answer after you do a little homework. If you are considering a property as a rental investment, determine your fixed expenses every month and think of EVERYTHING – this is critical, so go over this list until you have it all and then check it again:
- Mortgage if you will have one
- Taxes
- Insurance
- HOA fees
- Reserve
- Landscaping
- Pest control
- Management
Add all those up and then determine the rental rate.
Are you going for an annual tenant or are you going short-term?
Annual is slow and steady; short-term can generate more cash flow income, but it’s more work and less steady.
After you do all your calculations and you see the monthly profit, are you smiling or are you worried?
If you aren’t smiling, this is not the investment for you. Sometimes the market is too high and you can’t find a property that makes sense financially.
Keep looking and hold on for the right property. Keep doing your homework, and make sure you know the value that you are looking for.
To me, buying a rental property is like looking for treasure. If it was easy to find, everyone would be doing it. Rental properties are my favorite investment. It took me a year of looking to find my first one.
I had a wonderful broker that really knew value and he took me around and showed me properties so I could see and learn for myself.
I’ve had stocks and bonds, T-bills and CDs, and used to trade commodities (no bitcoin) – and real estate is my mainstay and true love. Make sure you always have needed insurance, a reserve to cover unforeseen and costly expenses (new HVAC, etc.), and do thorough background screening on all tenants.
Sincerely,
Hank Rossi
Each week I answer questions from landlords and property managers across the country in my “Dear Landlord Hank” blog in the digital magazine Rental Housing Journal. https://rentalhousingjournal.com/asklandlordhank/
Ask Landlord Hank Your Question
Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.
“I started in real estate as a child watching my father take care of our family rentals- maintenance, tenant relations, etc , in small town Ohio. As I grew, I was occasionally Dad’s assistant. In the mid-90s I decided to get into the rental business on my own, as a sideline. In 2001, I retired from my profession and only managed my own investments, for the next 10 years. Six years ago, my sister, working as a rental agent/property manager in Sarasota, Florida convinced me to try the Florida lifestyle. I gave it a try and never looked back. A few years ago we started our own real estate brokerage. We focus on property management and leasing. I continue to manage my real estate portfolio here in Florida and Atlanta. “ Visit Hank’s website here.