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Forum » do people who rent out homes make a lot of $?
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Thread: do people who rent out homes make a lot of $?

post 1667111443 08-31-2022, 10:58 PM
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do people who rent out homes make a lot of $?

i was looking into an investment property for about $375k, with 5% down payment. the first year the total equity built would be $5k, and the interest + property tax are $23k combined so if i deduct that on taxes i get back about $6.5k.

all in all, with one year of renting it out i'm getting $3.6k cash from equity after capital gains, and $6.5k cash via reduced taxable income.

is it only worth it if you have a large down payment so your tenants will build more equity for you?

or do you have to have multiple properties for it to be noticeable?

with total profit coming to about $10k/year, i could make that in the stock market without much effort..
post 1667112113 08-31-2022, 11:09 PM
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  1. dontstopbelief
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Originally Posted By heiltrump2024⏩
i was looking into an investment property for about $375k, with 5% down payment. the first year the total equity built would be $5k, and the interest + property tax are $23k combined so if i deduct that on taxes i get back about $6.5k.

all in all, with one year of renting it out i'm getting $3.6k cash from equity after capital gains, and $6.5k cash via reduced taxable income.

is it only worth it if you have a large down payment so your tenants will build more equity for you?

or do you have to have multiple properties for it to be noticeable?

with total profit coming to about $10k/year, i could make that in the stock market without much effort..
Lol, it wouldn't happen to be that time of the month again is it rentcucks?
post 1667113553 08-31-2022, 11:50 PM
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  1. dyee4613
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Originally Posted By heiltrump2024⏩
i was looking into an investment property for about $375k, with 5% down payment. the first year the total equity built would be $5k, and the interest + property tax are $23k combined so if i deduct that on taxes i get back about $6.5k.

all in all, with one year of renting it out i'm getting $3.6k cash from equity after capital gains, and $6.5k cash via reduced taxable income.

is it only worth it if you have a large down payment so your tenants will build more equity for you?

or do you have to have multiple properties for it to be noticeable?

with total profit coming to about $10k/year, i could make that in the stock market without much effort..
investment properties are 30% down
post 1667113923 09-01-2022, 12:03 AM
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  1. keels141
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Originally Posted By heiltrump2024⏩
i was looking into an investment property for about $375k, with 5% down payment. the first year the total equity built would be $5k, and the interest + property tax are $23k combined so if i deduct that on taxes i get back about $6.5k.

all in all, with one year of renting it out i'm getting $3.6k cash from equity after capital gains, and $6.5k cash via reduced taxable income.

is it only worth it if you have a large down payment so your tenants will build more equity for you?

or do you have to have multiple properties for it to be noticeable?

with total profit coming to about $10k/year, i could make that in the stock market without much effort..
It all comes down to the leveraged capital gains really, it doesn't yield much generally - you are focussing on the wrong metric IMO.

To illustrate using the above example:

If you put down $18750 for the above property and borrow the rest from the bank, you are hugely leveraged here and any gains or losses will be magnified. If the property has modest capital growth of even 6% per year, that is still an $22500 capital gain (375k x 6% growth = $22500).

If you took that same $18750 and invested in the stock market, in order to get profit of $22500 you would need to buy stocks that more than double in share price. The difference is the leverage you are using.

On the revenue side of things, the profit is much less because the costs of ownership are so high.

Property is a long term asset in my eyes because the transactions costs are so high.
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post 1667114013 09-01-2022, 12:08 AM
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Just stick to stocks, I guess?

I invest in real estate, starting is slow and you won't see much profit. You get to a point where you can have buildings pay themselves off and leverage them to buy more property which in turn also pays itself out though. The main benefit of it is getting assets which almost always appreciate, you have to get pretty far into it to live off the passive income.
post 1667121033 09-01-2022, 06:21 AM
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In my personal case study of n=3 all three are in the red after 2 years of renting. All their tenants paid the rent, they also decided to ruin the floors and landscaping. Run your numbers and see what it looks like at 5 years vs 10 years, but don't underestimate how chitty people can be, especially renters.
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post 1667121083 09-01-2022, 06:24 AM
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Some people make a lot of money. Some don't make anything.

It's not as easy as you think. But if you buy right and have a good system in place, it can be very profitable. Now is likely not a great time to buy homes you plan to rent.
post 1667121313 09-01-2022, 06:27 AM
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Originally Posted By heiltrump2024⏩
i was looking into an investment property for about $375k, with 5% down payment. the first year the total equity built would be $5k, and the interest + property tax are $23k combined so if i deduct that on taxes i get back about $6.5k.

all in all, with one year of renting it out i'm getting $3.6k cash from equity after capital gains, and $6.5k cash via reduced taxable income.

is it only worth it if you have a large down payment so your tenants will build more equity for you?

or do you have to have multiple properties for it to be noticeable?

with total profit coming to about $10k/year, i could make that in the stock market without much effort..
It's also about equity, and it's about being able to sell that house in 20 years for $500k. Do that with 10 houses and you can make $100k a year and have a $5MM portfolio. The trick is to put as little of your own money into it as you can.
When it comes your time to die, be not like those whose hearts are filled with the fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way. Sing your death song and die like a hero going home.
post 1667121493 09-01-2022, 06:32 AM
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What are the pros and cons for short term vacation rentals rather than long term tenants who fuk up the whole place and treat it like crap. Make it instagrammable and price it in the mid-high range, then do daily or weekly. You have to manage it actively but it nets a lot more $ and airbnb has insurance in case someone rekts the place.
post 1667121653 09-01-2022, 06:36 AM
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  1. OffwhiteBrah
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My uncle has 10 properties he makes on average $500 after everything on each . Doesn't sound like much but he keeps adding to his portfolio, goal is 20 by 2030
post 1667121803 09-01-2022, 06:40 AM
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Originally Posted By Anachron⏩
Please tell me that's not $500 annually.
monthly
post 1667121983 09-01-2022, 06:45 AM
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Originally Posted By dyee4613⏩
investment properties are 30% down
It’s going to depend in the lender but for all intents and purposes, this is completely false.
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post 1667121993 09-01-2022, 06:45 AM
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airbnb is much more profitable supposedly
post 1667122233 09-01-2022, 06:50 AM
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here comes the misc millionaire real estate crew cope.
post 1667122403 09-01-2022, 06:55 AM
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investing in houses is scummy.
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post 1667122633 09-01-2022, 07:01 AM
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Originally Posted By ~Hades~⏩
It’s going to depend in the lender but for all intents and purposes, this is completely false.
Hmmm risk/reward not looking too good atm
Originally Posted By theory816⏩
investing in houses is scummy.
slumlordclels apparently provide a very valuable service lol
Your schtick sucks and it screams insecurity.
post 1667122783 09-01-2022, 07:06 AM
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It's definitely not a get rich quick thing. It's more of a marathon/diversification/hedge against inflation
post 1667127833 09-01-2022, 08:40 AM
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Originally Posted By Anachron⏩
But what about investing the difference into index funds?
BRB investing -$500. Rentcels are copeing at levels previously not thought possible.
When it comes your time to die, be not like those whose hearts are filled with the fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way. Sing your death song and die like a hero going home.
post 1667128153 09-01-2022, 08:44 AM
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Originally Posted By digital022⏩
Hmmm risk/reward not looking too good atm
l
tell that to blackrock and vanguard
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post 1667130283 09-01-2022, 09:19 AM
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Originally Posted By Anachron⏩
When you ran your numbers, did you include the tax breaks on the additional expenses, your principal paydown, and capital gains?
No I didn't because it was not me, see my post above to clear up any confusion.

Also tax breaks are nice, I'm sure that's what they were telling themselves as they payed for those new floors, dry wall damage and water damage in the bathrooms. Yeah I just spent three weekends at home Depot and dropped 10k only to put in a new batch of tenants and stay up all night praying they don't do the same. But just wait until that tax credit kicks in boyos, whew we eating steak tonight! Human factor trumps all, take it into consideration first and foremost.
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