Real Life example of Purchasing a Rental Property and its Cash Flow
A real-Life example of Purchasing a Rental Property and its Cash Flow
I think that some people might think I'm exaggerating when I talk about what incredible returns you can get on rental properties so I wanted to share with you the exact numbers on a house that I bought almost a year ago now these numbers are you know the market was obviously amazing over the past 12 months and the values skyrocketed but you'll be able to see here in a minute that even with a much calmer market I still would have gotten incredible returns on this property now.
I've bought multiple properties over the past year I'm using this one as an example it's a home that I own in Coolidge and I'm using this one as an example because I bought it off the MLS this was not some you know private equity deal it wasn't bought from a wholesaler and it wasn't some you know back-alley transaction this was an MLS listed property I saw it I loved the numbers on it I put an offer in and bought it so I bought this home it's in Coolidge Arizona I paid 182 000 for it I put 25 down which was 45 000 and I financed 136 000 there's no HOA on the home and my monthly mortgage payment on the house is 740 a month, okay I rented it out the first weekend it was on the market with multiple applications for 1400 a month immediately rented like that so I created cash flow on this property of you know over 600 a month right away and then the most exciting part is that over the past year I've just increased the rents another two hundred dollars a month so it's now renting for sixteen hundred dollars a month and the value of the property I paid 182 for it the property is now worth two hundred and seventy-five thousand dollars.
I can say that with a very high degree of confidence because there are multiple model matches with extremely similar upgrades that just sold in the neighborhood for 275 000. So I've made around a hundred thousand dollars between my gains in equity and my profit on the rent. After making the mortgage payment my profits and the rent have accumulated to a hundred thousand dollars. I put forty-five thousand dollars down so in only a year I have got over 200 returns on my money now.
Yes, the market has been insane over the past year and it's probably not going to do the same thing over the next year even with the property only going up 8 or 10 if you could buy a property now you're going to be very happy a year from now two years from now five years from now that you bought the reality is I talk to people all the time who think you know prices are getting inflated and values might come down even if that's true you're never gonna have an opportunity to buy homes at a three and a half percent interest rate again and so being able to get into these properties was such low-interest rate you're practically guaranteed good cash flow and guess what rents never go down so even in the event of a market downturn the rent should at a minimum hold stable and so you know what you can get positive cash flow on a property on day one that is a win-win-win I hope you found this example helpful let me know if you have any questions.