![]() ![]() Then, when they try to get out of the deal by selling the property, they find that the have to sell at a huge loss because they overpaid in the first place. Think about it: An investor from California, Hawaii, or New York - where $500,000 will get you a very “average” home in many parts of the state - might think that being able to buy a rental property for $50,000 is a bargain in any market.īut the reality is that the property is in far worse condition and in a far seedier area than the turnkey company claims and in reality probably isn’t worth more than $30,000.Īnd to make matters worse, because the property is in a worse area than the turnkey company let on, vacancy rates are high, and the investor can’t even make the property cash flow (despite the pro forma showing a 10% “cash-on-cash” return). Turnkey companies buy in cash properties at a deep discount, rehab them, and then sell these rent-ready properties to investors, typically from high-cost-of-living areas.īe warned, though - some turnkey companies are on the shady side. ![]() ![]() This is where turnkey rental companies come in. The only problem is that there are certain parts of the country where the property values are so high that would-be local investors are either not able to invest because they lack the funds for a down payment or they are not willing to invest because the cash flow would be so poor. Private Lendingīuying a single-family home and renting it out is perhaps the classic form of investing in real estate. House hacking can be a great strategy to earn passive income, so if you have any questions about my house hacking journey, be sure to ask me in the comments! 2. Now, that $155 of monthly “cash flow” would get eaten up by maintenance and repairs, so at the end of the day, I was breaking even.īut I was living for free while my tenants were paying down my mortgage, while most of my peers were shelling out well over $1,500 a month for Los Angeles rent.Īnd now that I’ve moved out of this property and raised the rents, I now gross over $4,800 monthly while my monthly mortgage payment has remained the same. Monthly Rents (Including Bedroom in My Unit): $3,155.Here are the numbers on my house hack deal: I also rented out the single bedroom in my own unit for extra cash flow, while I slept on a mattress in the living room. Naturally, I “house hacked” this property, living in one unit and renting out the other three. In my twenties, I was fortunate enough to have a decent job as a CPA as well as a good credit score, which allowed me to purchase a four-unit property in the Los Angeles area where I live. $5,000 - $100,000+, depending on where you live and what kind of financing you choose ![]()
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