Tips for Investing in Multi- Family Properties
HI! My name is Michael Zubretsky. I am the owner of Venture One Realty and have some useful tips for you if you are thinking about investing in Real Estate. The 1% Rule can be useful for evaluating Real Estate Investments. With some quick and easy calculations, Investors can easily screen rental properties to determine the Cash Flow Potential of a particular property. This rule is used to determine if the monthly rent earned from an investment property will exceed the property’s monthly mortgage payment.
MONTHLY RENTAL INCOME > ONE PERCENT OF THE PURCHASE PRICE
For example – A property that costs $200,000 should have rental income of at least $2,000 per month.
1% x $200,000 = $2,000 per month Rental Income
Conversely – If you know that the monthly rent on a property is $2,000 then you can quickly calculate the Maximum Purchase Price.
100 x Monthly Rent = Max Purchase Price
100 x $2,000 = $200,000
Using this quick calculation, you have created an instant guideline where you now know that you can not pay more than $200,000 on this investment property without investigating other fundamental features during your due diligence.
The One Percent Rule in Real Estate Investing can be a helpful tool when you are evaluating cash flow potential, but it is only the first step in determining whether a property is a good investment.
Please feel free to contact me with any questions you may have so that I may help you in the purchase of a home.
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