Buying Rental Properties | How To Make Money

: Buy a 2–4 unit property using an FHA loan with only 3.5% down. You must live in one unit and rent the others to cover the mortgage.

: Use a Home Equity Line of Credit (HELOC) or cash-out refinance on your primary home to fund your first down payment. 4. Risk Mitigation & Operations

To avoid "losing" money, you must calculate these figures before buying: What it Tells You Gross Income – Operating Expenses The property's basic profitability before debt. Cap Rate (NOI ÷ Purchase Price) × 100 The expected return on a property if paid in cash. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash Invested) × 100 The yield on your actual out-of-pocket money. 50% Rule Expect 50% of gross rent to go to expenses how to make money buying rental properties

: As a quick benchmark, monthly rent should ideally be at least 1% of the purchase price.

: For a fee of 8–12% of monthly rent, management companies handle day-to-day headaches, though this reduces your immediate cash flow. : Buy a 2–4 unit property using an FHA loan with only 3

A conservative estimate for maintenance, taxes, and management. 3. Financing Your First Property

: Focus on areas with job growth, low crime, and proximity to amenities like hospitals or universities. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash

: Thoroughly check credit, criminal history, and past evictions; one bad tenant can erase a year of profit.