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Buying a rental property to for 4-5% annual returns?
07-09-2018, 08:18 PM
I’m starting accrue cash and feel the stock market has rallied to an extent that I’m cautious to keep investing in it too highly right now.
I’d love to get a rental property in the $200-250k range. Is it fairly easy to find one that can achieve a 4-5% annual return after expenses?
Would going to a decent realtor be a good place to start? Any cities/areas people would recommend?
Thanks.
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Buying a rental property to for 4-5% annual returns?
07-09-2018, 08:46 PM
I'm no real estate expert, but 4-5% seems quite low. Personally, I'm looking at sites like Fundrise which have around 8-11% annual returns through real estate.
Are you looking at investing in RE more for appreciation or for cash flow?
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Buying a rental property to for 4-5% annual returns?
07-09-2018, 08:50 PM
If you're just looking to park your money, you can get ~8% annual return by putting your money in various indices (S&P 500, DJIA, etc) and leaving it there for a few years. Indices in the U.S. always trend up, and so long as you don't panic and sell during downturns, your wealth will grow over the long term.
Current inflation rate is 2.8% so a 4-5% return isn't worth your time.
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Buying a rental property to for 4-5% annual returns?
07-09-2018, 09:23 PM
Good points but I am assuming that the value of the property appreciates at around inflation as has been historically the way.
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Buying a rental property to for 4-5% annual returns?
07-09-2018, 09:31 PM
I would buy something where you can pay the mortgage, property taxes, and general maintenance and upkeep with the amount you are collecting in rent. Put the money down on the property and let it pay for itself, calculate your portion of the mortgage payment that is equity as your profit, but remember, you will still be cash neutral. At the end of the day, you want something that sustains itself. If you don't obey this basic rule, you could end up with something that makes you feel poorer , even if you're technically up on your capital gains. Still, real estate is usually a winner, better than stocks in my mind, you just have to be smart, plan, and hustle a bit for it, which keeps a lot of people out of the market. Also -- remember the rule is you make money when you Buy at a great price.
“Where the danger is, so grows the saving element.” ~ German poet Hoelderlin
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Buying a rental property to for 4-5% annual returns?
07-10-2018, 06:30 AM
Dupe thread. Do a search, some good info in the other rental real estate thread.
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Buying a rental property to for 4-5% annual returns?
07-10-2018, 10:55 AM
I have one rental property so I'm no expert but my rent is $1400 and my mortgage is $700, way more than 4% returns, at 4% your gonna be operating at a loss as that's not even enough money to deal with vacancies, repairs, etc.
I believe most people in real estate want 10% returns minimum and even that is low for some peoples comfort
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Buying a rental property to for 4-5% annual returns?
07-10-2018, 08:22 PM
I wouldnt go in on property that looks like 4-5% on paper. not a good market or you didnt look at enough options. and unforseen costs will cut that 4-5% down. your better off going with a reit at 8%+ and no work in that case.
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Buying a rental property to for 4-5% annual returns?
07-10-2018, 08:22 PM
I wouldnt go in on property that looks like 4-5% on paper. not a good market or you didnt look at enough options. and unforseen costs will cut that 4-5% down. your better off going with a reit at 8%+ and no work in that case.