How to wisely invest in real estate to rent

How do you know if you buy a certain property that you can gain profit from it after renting it out? Use this simple formula to find out.

72% of ARV (After Repaired Value)
Subtract realtor fees to sell home
Subtract rehab cost
Subtract hard money cost

Here is how it works.

We have a house worth $100,000 (ARV) in great shape. We would plug this into our formula above.
$100,000 * 72% - $6000 realtor fees - $9000 rehab cost – 6 months hard money $5412 = you need to offer less then $51,588 to ensure a great profit margin. Rehabbing you should always try to make $15,000 or more, never less if you can. You can use 70% * ARV if you are new or want to make sure you have enough cushion.

My hard money loan cost breakdown. I will borrow $57,000, which I will pay 13% and 3 points with my hard moneylender. Monthly cost and point cost listed below for our hard moneylender.

· Monthly payment would be $617.00
· The 3 points add up to $1,800

We use this formula every time we buy a house. If the cost is too high and we cannot get the seller to lower the price then we walk. There are so many deals out there you should be saying next if the deal does not work. You must make sure the property you are buying has the profit center you need, remember you make money when you buy. If you buy a property at a huge discount then you will always come out on top because you calculated what is exactly needed to do the deal and make a profit.

If you would like me to show you some homes in the area that might fit this equation for you, contact me today. I specialize in of Snohomish and King county and love to focus on Everett real estate where this equation may come in handy more than you would think. My San Diego Homes real estate partner's website will help you Search San Diego's Best Real Estate. Leading source for new and resalehomes for sale throughout San Diego country.