QUOTE (ruddens @ Jan 6 2009, 09:45 AM) Hi,
I`m just building an investment plan, and my wish is to eventually invest in real estate on a full time basis. However, as I`m developing my plan, I just don`t see how real estate brings money in my pocket to pay my personal bills, groceries, and normal life expenses. It seems I can only make money with equity and when selling after a few years. Even when using OPM, spliting profit with other investors, there`s almost nothing left to survive on...! Until it`s sold...
Is that all there is to it? How do people make a living out of real estate if it doesn`t bring regular income?
Thanks
Ruddens
it takes many years .. it is NOT a get rich quick game .. depending on the leverage cash-flow is strong or poor ..
Example:
one of rental pooled condos (see:
http://www.prestprop.com/kensington) would sell for 120 to 150K with rent being 825 - 1025 depending on unit size and quality. Taxes, management fees and condo fees run about $350 to $400/month. If you paid cash for a $150,000 condo your cash-flow would be $600 to $625 or so per month or $7500/year .. about 5%. Usually you get a mortgage though .. so the higher the mortgage the worse the cash-flow but the better the ROI if you assume that an average condo in an average city in AB would go up, on average 3-6%/year .. there is a calculator here where you can manipulate interest rates, price, rent, and growth forecasts and it shows you cash-flow and ROI.
The calculator is here:
http://www.prestprop.com/calculator.html
Generally, as a rule-of-thumb, large single family homes and good locations in big cities do not work well for cash-flow. Usually you have to buy a smaller house or condo or townhouse, and usually it works better in sub-urbs or smaller towns as rents are a little lower than big cities but prices are a lot lower .. so you have to look for the right asset class in the right location .. perhaps you`re looking in the wrong places or not hard enough ?
Also read this post on how to get started and how to make money:
5 ways to make money
http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html
How to get started
http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html
One reason why REIN has bronze(3 properties), silver (8) and gold (17) "medals" is that only at the gold level could you realistically live entirely off the income .. until then some other form of income is required (usually a job) .. some REIN members have done it in 1-2 years .. many in 4-6 years .. all VERY DOABLE if you follow a system such as the one REIN teaches !