06-01-2018, 07:34 AM
Real estate and renting it out is almost always about the equity built.
The return isn't based on the month to month cash flow, it's on any equity you build for the amount of money you put in. Let's say you put a standard 20% down payment on that $400k condo, or $80,000. To "beat" standard investing, you want to get a 5% return, when you go to sell. Which means you only need to build $4,000 in equity annually from the rent paying the mortgage payments.
The return isn't based on the month to month cash flow, it's on any equity you build for the amount of money you put in. Let's say you put a standard 20% down payment on that $400k condo, or $80,000. To "beat" standard investing, you want to get a 5% return, when you go to sell. Which means you only need to build $4,000 in equity annually from the rent paying the mortgage payments.