: Maintain a "rainy day fund" (often $10,000–$30,000) to cover unexpected major repairs like a new roof or HVAC system.
: Thoroughly check credit, criminal history, and past evictions; one bad tenant can erase a year of profit. how to make money buying rental properties
To avoid "losing" money, you must calculate these figures before buying: What it Tells You Gross Income – Operating Expenses The property's basic profitability before debt. Cap Rate (NOI ÷ Purchase Price) × 100 The expected return on a property if paid in cash. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash Invested) × 100 The yield on your actual out-of-pocket money. 50% Rule Expect 50% of gross rent to go to expenses : Maintain a "rainy day fund" (often $10,000–$30,000)