Hi guys, I’m thinking about buying my first rental property here at college. I know an investor who is looking to get rid of all his college rentals. The soccer coach has offered to be my silent partner in case things go up or for unexpected costs. I know there is a formula to determine the cash flow. Would you guys mind sharing this with me? Also, are there any other words of advice in getting into the rental business?
Thanks,
David
Dave,
Cashflow = All income - All expenses
All income is rent received and amy miscellaneous income (like from the laundry machines, games, phones, etc. - mostly in larger, multi-unit properties)
All expenses is, at a minimum, principal and interest, taxes, insurance, maintenance, management, vacancy, any utilities, etc.
Add up all of your expenses, subtract it from your income and that is your cashflow (hopefully positive cashflow)…in the rental world, cashflow is King!
Words of advice:
- Buy low, rent high
- Trust your tenants but check everything (twice)!
- Treat your tenants as you would want to be treated – they’re people, too - at least most of them are
- Read everything in this forum!
- Ask questions
- Join the local REI Club and the local landlords’ association
Keith
Thanks for the reply kdhastedt. I appreciate your help.