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Don wrote:
> "A. A." <dont@spam.com> wrote in message news:ekQLf.716$FE2.611@trnddc01...
>> Hi All,
>>
>> I have been investing in the stock market for many years,
>> and been happy with the returns. However, I was recently
>> approached with a more secure investment opportunity
>> where I can buy a real estate to offer as rental property.
>> I never invested in real estate before, and I'll
>> certainly do a lot of research if I decide to do it.
>> However, I'd only like to know for now what kind
>> of monthly return can be expected from it. For example,
>> for each $100k of a rental property value you invest,
>> what's the minimum rent you would accept, and the maximum
>> reasonable rent that the tenant can be expected to pay?
>
> You will find a lot of chance involved, and you can't really predict in
> advance what your monthly return will be. The rent you can expect varies
> widely with geographical area, and you don't have much control over it.
> Whether or not your cash flow will be positive or negative depends more on
> the size of your down payment than anything else. As in stocks, I like to
> think in terms of total return (dividends plus capital gain) and not worry
> too much about monthly cash flow just based on rent minus expenses.
I fully understand that. The reason for my question isn't
really to set my expectation for how much I'll make per
month, but to set a rental amount for my potential tenants.
I have not bought the property yet, and there are several
properties we are considering (myself and potential tenants).
They are asking how much they will have to pay per month
for each property. Is there a conservative rate that I can
start with? I am thinking like %1.5 is conservative on average,
but I could be wrong since I do not have much experience in
real estate market conditions. Is there a quick rental
valuation model based on property price that can give rough
estimate the range of rental amount that an owner can ask for?
I know that there are professional real estate appraisal and
valuation agencies who do this kind of work for living, but
I am only looking for a rough estimate for now. Once I decide
to go ahead with the investment, then I can hire a professional
to give me a more accurate perspective of the particular
property I am interested in.
-AA
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Re: Real Estate Monthly Rate of Return
