When it comes to real estate investing, it’s not uncommon for beginners to miscalculate their cash flow. Many mistakenly believe that because they’re renting their property out for $1,000 a month, yet only paying $700 to $800 in monthly mortgage costs, it must mean they have a positive cash flow. In reality, they’re simply failing to account for other expenses. Instead, consider this approach: the 50% rule. This rule asserts that 50% of the rent you collect should go to your monthly expenses and as long as your principal interest is below that 50% threshold, you’ll have a property with positive cash flow on your hands. If you have any questions or would like more information about buying, selling, or investing in real estate, don’t hesitate to contact us. We’d be happy to help!
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