Q. Im just learning about real estate investing.
How many rental properties do I need to have in order to make good money from it?
How many rental properties do I need to have in order to make good money from it?
A. Dear Bob,
It's smart of you to come on Yahoo Q and A to ask that question because sometimes people on Yahoo have an answers that you can't find written in any books, or online. I don't know if my answer will help you or not, but here it is:
It's not as simple as 'how many properties do you need in order to make money'. You have to do a FEASIBILITY STUDY of your specific situation and the specific rental properties first.
Just a handful of things to determine for starters:
--What are the demographics of your area? Who is likely to rent from you? [ie., students attending a university near you; retirees attracted to your area; etc.] Is your unit a desirable unit to rent? This can change over time. [Example: When I first moved to my area at age 23, there were few apartment complexes for young people to rent; thus, young people rented 4 bedroom houses together. But then a large complex of apartments was built nearby and fewer young people sought out houses to share--a hardship for 4-bedroom-house-landlords}. Are you in a neighborhood that's going up in value or in decline?
--What are the dollar mathematics: How much did you pay for the rental unit to begin with? Do you have enough money for a down payment on the rental in the first place? Did you get it at a bargain price? Does it need upgrading?
Did you take out a mortgage for it? If so, will the rent you receive offset the closing costs you paid on the unit in the first place, the mortgage you're paying on it, plus the insurance, plus the HomeOwner's Association Fee, plus property taxes [If it doesn't, then you're losing money].
Is there a demand for rentals in the area, or is it a 'renter's market'? What if your rental sits empty for 2 months because you can't find a renter [this happened to me]? Do you have an emergency fund, or other source of income to cover your loss of rental income? Will you have to drop the monthly rent you charge to get tenants?
And if things don't work out and you want to bail out of the landlord business--will you be able to sell your rental properties at a profit, or at least break even (remember that there are costs in selling property, too), or will you have to sell them at a loss just to get rid of them, rather than continuing to pay maintenance expenses and taxes on them?
Some real estate investors have made millions, but many have lost money. Over recent decades, inflation was carrying the price of real estate up by leaps and bounds. But many real estate investors were investing NOT because of rental money they might make, but because the properties themselves were ever-climbing in value and they could ultimately sell their property, they believed, at a huge profit. Then the market crashed, and everything changed. That doesn't mean people can't get rich on real estate again--investors are already buying properties at rock-bottom prices to sell or rent and make money. But it's not as easy as you think, and you need to view it as 'Investment,' not as income that you can support your life-style on.
It's smart of you to come on Yahoo Q and A to ask that question because sometimes people on Yahoo have an answers that you can't find written in any books, or online. I don't know if my answer will help you or not, but here it is:
It's not as simple as 'how many properties do you need in order to make money'. You have to do a FEASIBILITY STUDY of your specific situation and the specific rental properties first.
Just a handful of things to determine for starters:
--What are the demographics of your area? Who is likely to rent from you? [ie., students attending a university near you; retirees attracted to your area; etc.] Is your unit a desirable unit to rent? This can change over time. [Example: When I first moved to my area at age 23, there were few apartment complexes for young people to rent; thus, young people rented 4 bedroom houses together. But then a large complex of apartments was built nearby and fewer young people sought out houses to share--a hardship for 4-bedroom-house-landlords}. Are you in a neighborhood that's going up in value or in decline?
--What are the dollar mathematics: How much did you pay for the rental unit to begin with? Do you have enough money for a down payment on the rental in the first place? Did you get it at a bargain price? Does it need upgrading?
Did you take out a mortgage for it? If so, will the rent you receive offset the closing costs you paid on the unit in the first place, the mortgage you're paying on it, plus the insurance, plus the HomeOwner's Association Fee, plus property taxes [If it doesn't, then you're losing money].
Is there a demand for rentals in the area, or is it a 'renter's market'? What if your rental sits empty for 2 months because you can't find a renter [this happened to me]? Do you have an emergency fund, or other source of income to cover your loss of rental income? Will you have to drop the monthly rent you charge to get tenants?
And if things don't work out and you want to bail out of the landlord business--will you be able to sell your rental properties at a profit, or at least break even (remember that there are costs in selling property, too), or will you have to sell them at a loss just to get rid of them, rather than continuing to pay maintenance expenses and taxes on them?
Some real estate investors have made millions, but many have lost money. Over recent decades, inflation was carrying the price of real estate up by leaps and bounds. But many real estate investors were investing NOT because of rental money they might make, but because the properties themselves were ever-climbing in value and they could ultimately sell their property, they believed, at a huge profit. Then the market crashed, and everything changed. That doesn't mean people can't get rich on real estate again--investors are already buying properties at rock-bottom prices to sell or rent and make money. But it's not as easy as you think, and you need to view it as 'Investment,' not as income that you can support your life-style on.
Purchasing a rental property - where should we start?
Q. My husband and I are dissatisfied with the return we are getting in the current stock market. Instead of continuing to dump our money there, we thought we might try investing in a rental property. We are not sure who we should talk to first - a loan company, a realtor, a lawyer? What is the first step? Also, what are some things we might be overlooking as we consider this option? Any advice is welcome!
A. I always suggest you speak to a banker first. It is most important to be aware of the expenses associated with the investment before you do anything. Plus, it will enable you to identify how large of an investment you can make.
Second, go see the lawyer or whomever you need to help in forming an LLC or other corporation that will seperate your personal liability.
Third, you need to identify the right Realtor who can help you with investment property. While you may be thinking in residential terms, rental property is often better understood by commercial Realtors who might have some other options you haven't fully considered too.
Fourth, make a date with your calculator to make sure everything adds up!
Second, go see the lawyer or whomever you need to help in forming an LLC or other corporation that will seperate your personal liability.
Third, you need to identify the right Realtor who can help you with investment property. While you may be thinking in residential terms, rental property is often better understood by commercial Realtors who might have some other options you haven't fully considered too.
Fourth, make a date with your calculator to make sure everything adds up!
Where can I find info on getting started investing in rental properties?
Q. Mu husband and I want to buy a rental properties to get started in this business. I have read a few books. Where else can I find resources to learn more?
PS: do not point me to these real estate "gurus" sites, please.
PS: do not point me to these real estate "gurus" sites, please.
A. Try talking to a loan officer or a Broker of a realtors firm. If one of you beome a Realtor you can get on the BLM list and find cheap houses (before the public views) and you can buy them quick. I think if you just get a realtors lic. it would be so much easier for you to get what you want.
What can I do to become a better investor?
Q. I invest in rental properties, small businesses, stocks and commodities in Michigan, Italy and Egypt.
Every advice is appreciated.
Every advice is appreciated.
A. Sounds like you are way ahead of most of us already.
The best way to learn is from a book and good reference material.
There are some good reference websites
http://www.howthemarketworks.com./
http://stockmarket.makemoneyideas.in/
http://simulator.investopedia.com/home.a�
http://www.top10traders.com
http://investopedia.com (for finance terms and definitions)
http://investing.sitesled.com/
www.stockcharts.com
www.freestockcharts.com
http://www.fool.com/school/basics/basics�
http://beginnersinvest.about.com/library�
http://www.mysharetrading.com
http://help.yahoo.com/help/us/fin/
And there are some timeless and excellent books
"Which Is Better, Buy-and-Hold or Market Timing?"
"Do You Have What It Takes to Be a Market Timer
Kahn, Michael N.Tech. Anal. Plain & Simple
Kamich, Bruce M.How Technical Analysis Works
Lefevre, Edwin - Reminiscences of a Stock Operator
about Jesse Livermore
O'Neil, William J.How to Make Money in Stocks
Oz, TonyHow to Make Money From Wall Street
Rotella, Robert P.Elements of Successful Trading, The
Schwager, JackStock Market Wizards
Schwager, Jack D.New Market Wizards
Sperandeo, VictorTrader Vic-Methods of a Wall Street Master
Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay
The Intelligent Investor, by Benjamin Graham
One Up on Wall Street, by Peter Lynch
Common Stocks, Uncommon Profits, by Philip A. Fisher
Stocks for the Long Run, by Jeremy Siegel
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
Trading for a Living, by Alexander Elder
From Riches to Rags, by I.C. Freeley
Millionaire Traders, Lein & Schlosberg
The best way to learn is from a book and good reference material.
There are some good reference websites
http://www.howthemarketworks.com./
http://stockmarket.makemoneyideas.in/
http://simulator.investopedia.com/home.a�
http://www.top10traders.com
http://investopedia.com (for finance terms and definitions)
http://investing.sitesled.com/
www.stockcharts.com
www.freestockcharts.com
http://www.fool.com/school/basics/basics�
http://beginnersinvest.about.com/library�
http://www.mysharetrading.com
http://help.yahoo.com/help/us/fin/
And there are some timeless and excellent books
"Which Is Better, Buy-and-Hold or Market Timing?"
"Do You Have What It Takes to Be a Market Timer
Kahn, Michael N.Tech. Anal. Plain & Simple
Kamich, Bruce M.How Technical Analysis Works
Lefevre, Edwin - Reminiscences of a Stock Operator
about Jesse Livermore
O'Neil, William J.How to Make Money in Stocks
Oz, TonyHow to Make Money From Wall Street
Rotella, Robert P.Elements of Successful Trading, The
Schwager, JackStock Market Wizards
Schwager, Jack D.New Market Wizards
Sperandeo, VictorTrader Vic-Methods of a Wall Street Master
Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay
The Intelligent Investor, by Benjamin Graham
One Up on Wall Street, by Peter Lynch
Common Stocks, Uncommon Profits, by Philip A. Fisher
Stocks for the Long Run, by Jeremy Siegel
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
Trading for a Living, by Alexander Elder
From Riches to Rags, by I.C. Freeley
Millionaire Traders, Lein & Schlosberg
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