With apologies to Waylon Jennings & Willie Nelson, it’s time for me to get back to the basics of my real estate love. Real estate investing. Now, while I won’t be discussing Luckenback, Texas, I will be discussing my home town area of Kansas City.
How Do I Know If The Rental Property I’m Buying Will Be Profitable?
Real estate investing in Kansas City is not very complicated. It can be treacherous to those that don’t heed to common sense. But it’s not too complicated. In a nutshell here is the basic formula for determining whether or not a rental property you are considering will be profitable or not;
– Expenses (projected)
= Cash flow (positive or negative)
There! That’s it!
Income can take on many variables. There is income from rent, laundry, parking, late fees, etc.
Expenses can take on many more variables. There is, of course, the mortgage. There are also insurance, property management, maintenance, upkeep, legal and “future” expenses. (That is by no means a complete list of expenses.)
Learning how to project income and expenses is where the rubber meets the road. And once you know what the Net Operating Income of a property is you can then set a value.
Not sure how to determine and then work from Net Operating Income? Stay tuned.