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Have you ever considered long-term real estate investment?
Flipping is not the only way to be an investor in Rancho Cucamonga. In addition, residential rentals are a great way to save for retirement, because rents will continue to rise by about 2 to 3% per year. Here’s a quick example.
Say we purchase a $150,000 home with a 25% down payment and gross rent of $1,200 per month. Annually, gross income comes in at $14,400, but we have to deduct some for vacancy and collections, which is estimated at 5% or $720. Or effective annual gross income comes after subtracting operating expenses like property taxes, insurance, yard work, water, sewer, repairs, or management expenses. These costs can equal about 8% to 10% of the gross rent.
This would give us our net operating income of $10,605. If we divide that by our sales price, we have a return of 7.07%, but it gets better. Let’s look at our cash-on-cash. If you actually divide the net operating income by the down payment, you would be getting a 21% return on your investment!
The good thing about this is that it’s very measurable, and it’s consistent. It’s much easier to predict than the stock market. This doesn’t even consider if the value of the home appreciates, which could add even further to your investment.
If you’re looking to get into real estate investment or to buy a home, give us a call. We’d love to work with you!
