How To Make A Fortune As A Landlord Renting Properties

Most people don’t realize one of the easiest ways to build wealth is owning rental properties.

Many people think that the only way to make large sums of money is by flipping properties… purchasing, remodeling and reselling the properties for a huge profit in a short period of time.

Would it shock you to know that you could do the same exact thing with rental properties? Let me explain how:

Let’s pretend the exact same scenario existed. You find a rental property regardless of whether that is a single family home, 2 unit 6 unit 20 unit building, it just doesn’t matter.

You find a property is under market value may be either because of a disinterested owner, neglected property, over leveraged and something you might need to do a short sale on, there are a variety of reasons why somebody would sell a property for a low price under market value.

You locate these sellers and put a deal together, you buy the property take ownership go in and start remodeling the units, the common areas whatever it is you need to do interior and exterior remodeling.

Let me give you this example. Let’s say the units currently rent for $800 a month but if the building was updated it would be worth $1,200 a month in rent per unit.

Currently the building makes a little over $57,000 in gross rental revenue per year.

Let’s say it cost you $100,000 to fix it up, about $15,000 per unit give or take. Theoretically you should be able to buy this building for about $460,000 to $550,000 in as is condition.

You put another $100,000 into it and you have a total of $600,000 in the building. I’m using the middle number roughly of purchase price and rehab.

Now the building is generating $86,400 per year in gross rent. If you took the bank averages for lending based on cash flow and debt service coverage ratio then you should be able to refinance the property for a little over $775,000. If you subtract the $600,000 total investment you have in it, you would have approximately a hundred and $75,000 in cash, and you would cash flow about $1,738 per month in your pocket after mortgage payments, taxes and insurance.

Obviously a lot of the cash out and cash flow is going to depend on your interest rate, loan to value and rent but as an example this is how you can make huge returns owning rental properties without ever having to sell them and effectively without ever having to pay for them since it is your tenant who is making the monthly payments.