Buy&Rent
Define Your Buybox
Target Property Types: Single-family homes, duplexes, triplexes, small multifamily buildings.
Location Focus: Areas with strong rental demand, population growth, job opportunities, good schools, and low vacancy rates.
Condition: Value-add or Turnkey
Financing: Often involves conventional mortgages, DSCR loans, or portfolio loans. Some investors use HELOCs or private capital.
Run the Numbers
Monthly Rental Income: Rent collected should exceed monthly expenses to produce positive cash flow.
Expenses Include:
- Mortgage payments (principal + interest)
- Property taxes
- Insurance
- Property management fees (if outsourced)
- Repairs and maintenance
- Capital expenditures reserves (CapEx)
- HOA dues (if applicable)
Analyze Return on Investment
Natural Appreciation: Over time, real estate tends to increase in value due to market demand, inflation, and improvements.
Forced Appreciation: Investors can also add value through renovations or better management (e.g., increasing rents or reducing expenses).
Loan Paydown: As tenants pay rent, part of the mortgage is paid down, increasing the investor’s equity.
Tax Depreciation: Provides a paper loss that can offset rental income.
Mortgage Interest Tax Deduction: Lowers taxable income.
Future Potential 1031 Exchange: Allows investors to defer capital gains taxes by reinvesting profits into another property