$3000 in rental income

[shahriar]

Hey Everyone

I was wondering if I wanted to make $3000 a month after all expenses in rental income, whats the best way and location to do it in (BC preferably) in lets say the next 1 too 2 years. Also how much minimum cash would you say is needed?



Thanks in advance for the help

 

[invst4profit]

To be on the safe side a ballpark estimate would be rental income of about $6000/month plus whatever is required to cover debt repayment (mortgage interest and principal)



Rental income properties expenses roughly run at about 50% of income (long term) not including debt repayment. If you buy your property(s) with all cash then rental income of $6000 should do the job. Give or take as expenses at best are only a guestimate going forward depending on many unknown variables (type of building, age of building, tenant screening process, tenant demographic, neighbourhood, self or property company managed etc.)



You will need multiple units, small/medium size apartment building probably. The rest of your questions will need to be answered by someone that knows the BC market.

 

[shahriar]

Thank you for the reply. I am looking at few 4 plexes outside the lower mainland where prices are cheaper but also lower rent. would you think these are the best building type to go after and is the mortgage the same as SFH.

 

[invst4profit]

Lower prices/lower rents are relative. The primary difference is that lower rents usually equate to lower quality tenants. They are much more work to manage and they generally cause more damage and result in higher tenant problems (non payment of rent, evictions etc.)



Mortgages on rental properties require a minimum of 20% down payment.

 

[housingrental]

I recommend you get in contact with an investment focused realtor for real life examples of what is for sale

 

[Thomas Beyer]

If you buy a $600,000 asset with a 6% CAP rate with no mortgage you will get $3000 a month or $36,000 a year.



That is a 4- to 6-plex in the lower mainland.



You can also use the $600,000 and buy a $2M asset for a higher overall return, but with less cash flow due to mortgage. What do you want ? Maximize ROI or cash-flow ? You cannot have both.



More on "What is better: high ROI or cash-flow" here: http://myreinspace.com/forums/p/26733/131894.aspx?#131894