Single-Family Homes is Your Quick Real Estate Start-Up 

Make an offer on the detached single-family home if it measures up to your requirements in terms of rental potential, down payment requirement, and profit you can earn from the home once you own it. YOU MUST HAVE A POSITIVE CASH FLOW FROM EVERY SINGLE-FAMILY HOME YOU INVEST IN! Enter the full details of your offer in your Real Estate Riches Success Book. Acquire the property and rent it to a suitable tenant. Wait at least three months to get some experience with the property (real estate lenders call this "seasoning.") Then go on to your next single-family home to expand your wealth building.

Work the Numbers for Each Property You Acquire
Once you own your first rental property, you're in business for yourself. And when you're in business, you must "work the numbers"—that is, figure your expenses and your profit. If you had trouble with numbers in school or on your job, don't worry! When you work the numbers for your income and profit, you'll find them easy. Why? Because when your livelihood is involved, the numbers suddenly have real meaning and they "just seem to add up," as many BWBs tell me.

To work the numbers for any single-family home of any type, take following steps:
* Get the price of the house from your notebook.
* List the down payment you'll make.
* Figure your monthly mortgage payment using Table 10.1 (on page 210).
* Calculate your monthly payment on your down payment loan using Table 10.2 (on page 211).
* List the monthly cost of your real estate tax, maintenance, insurance, and any other expenses.
* Estimate the monthly rental income you expect to get.
* Figure your monthly Positive Cash Flow.
* Compute your annual Positive Cash Flow.

Now you can perform these steps, quickly and easily. Here's how to figure your Annual Positive Cash Flow for a house.
* The Price and Down Payment come from your Success Book.
* Figure your monthly mortgage payment by using Table 1 in Chapter 10, and following the steps shown in the example accompanying the table. This is easy to do. If you have any questions, just call me and I'll do it for you on the telephone once you give me the numbers. Use an interest rate based on the going charge in your area, first call any bank and ask what their current mortgage fixed interest rate is. Or you can find this in mortgage ads in your local paper.
* Figure your monthly down payment loan payment the same way, getting the current interest rate on your credit card—if you used a credit card line of credit for your down payment. Or use the interest rate for a persona! loan you got from a bank, credit union, or finance company.
* Enter your info from these steps in your Success Book on a form.
* Next, list the other monthly expenses associated with 123 Main Street in Figure 5.2. These expenses are: Real estate tax = $150; Maintenance = $75. You get these monthly expenses from the seller or you estimate them, based on data you obtain from the tax authorities. Enter them in your Success Book. This gives you a complete picture of your costs.
* Compute your monthly positive cash flow by subtracting the total of your expenses, S805, from your monthly rental income, $1,125, to get your monthly positive cash flow, $320. Your Annual Positive Cash Flow is then = 12 X $320 = $3,840.

 

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