From the inbox: you mention “cash flow” investing in rentals a lot, what does that mean?

Good question! In our city, we have somewhere around a 96% occupancy rate for rentals (I have heard it quoted as -1% but haven’t been able to validate that yet). This represents a great opportunity to invest in ‘income’ property here (I hope to buy at least one quadplex personally soon).

When I mention “cash flow,” I am specifically talking about the difference between the mortgage on a home and the rent it brings in. For example, a 3 bedroom, 2 bath home in Colorado Springs rents for – on average – $1100. What if you could buy that home with a mortgage of around $800 taxes and insurance included, then rent it out? The spread would be $300. Assuming a $20,000 downpayment, the ROI (Return on Investment) would be 5.5% a year gross. That’s MUCH better than a checking or savings account generates.

What if I don’t have $20K, you may be saying? That’s okay; there are other options from owner occupied quadplexes to partnerships and more.

Questions? Email me at robthompsonrealtor@gmail.com or call 719-440-6626.

Also, check out Bigger Pockets “Buying Rental Property.”

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