Apartment and Rental Properties - Are rentals the way to go?

I have recently purchased a duplex.

I rent the top out for 1300 and the bottom for 800, bringing in 2100 in revenue/month.

At 25% down, my mortgage and taxes are 1150/month, leaving $950. I pay utilities which average ab out 400/month. So I'm left with about $500 for putting that money down and putting up with renters.

I'm new to this. Is this the way to go????

Thanks.

There are two kinds of income - active (where your time and effort creates the income) and passive (where your money is making you the income). Rental property seems on the surface like passive income, but it is very much active income. You can make a lot of money with rental property and the return you've mentioned seems reasonable. However, there is a lot of work involved, so it's not for everyone. Keep at your duplex for a couple seasons until you've dealt with a few turnovers and you'll know if it's right for you and whether you should obtain more property. If the answer's no, you should at least be able to sell your duplex for a profit.

Insurance cost is not mentioned, but if you have a good property with little need for repair and GOOD tenants, sounds like a fair return. I my area it would be anyway. Especially if you are handy and do repairs yourself. If you are depending on the rent to pay for the property, I would advise having a little cash on hand. New roof can take several $500 months to replace.

Also dont forget most of the time .You have to be a horses BUTT to come out ahead. ;)

I have had the tenants little girls ask me if I was going to make them move when the stepdad and mom split up and the rent was not being paid.

Well, you're missing some major expenses so far. I guess that's because you're a pretty new landlord.

Nationwide the expenses on single family (which includes up to 4 units, don't ask) homes average about 45%, or rent. What is your allowance for; vacancy, repairs, maintenance, etc?

You're overlooking the "opportunity cost" of the 25% you put down. You need to subtract the income forgone from that money from your monthly income.

I've had rental houses since '78 and I can tell you that you're doing OK. Of course that's better than probably 90% of SFH landlords who are losing their shirts but have the ego gratification of telling their friends, "I'm a real estate investor".

I'd be taking a really hard look at the utilities. Either get them on seperate meters or be installing extra insulation, ridge and soffit vents and low flow faucets everywhere in the house. BTW, I've NEVER paid any utilities on any rentals.

frank

You have been at this a year now. Hows it going? I had a rent house for about 15 years. I never had to many problems but always seem to have good people renting. The renters were ALWAYS responsible for their utility bills !! That is the norm in my area. I would have never considerd it as part of the rent. What do you do if a renter keeps his air conditioner on 65 deg. during the summer? In my area the ele. bill would be as much as the rent!! PS.... Really helps if you are a handyman and take care of the small stuff. If your not, become one.

Ah you forgot a BIGGIE. Property taxes!
There is also buisness license fee and health department fee per year per property here in CA at least. Sounds like you may break even IF everything runs smooth and you don't get any bad tenants. Murphy's law you probably will not have smooth sailing.
.

I'm gonna close this thread - original poster hasn't logged on in a year and a half.