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More in-depth analysis on how you can make money rental properties. now imagine if you had 15 20 or 30 rental properties it made you $200 a month. that would change your life forever.. there’s a couple things I want you to remember. earned income and passive income. earned income is where you work one hour and you get paid for that one hour of work. passive income’s totally different where you work one hour and you continually get paid over and over and over again it’s. exciting now imagine you had replaced your earned income with passive income. that now you can not work you can choose to say I quit my job.
I’m out of here because I have money I don’t have to worry about my expenses and I want to see you be able to quit your job with rental properties and have this passive income that can replace your in earned income and. follow along today as we look at how rental properties can make you money month after month after month and then also look at the business process that you’re going to need to develop in order to have this be passive income and have little work on your shoulder everything for property managers to inspect there’s. With this free Investing course, many different people on your team that we’re going to look at today and. far along let’s jump right on it take a look at it alright.
let’s get started. this is the second part of her many course and making money with rental properties and. let’s look at how we can achieve our Financial Freedom with rental properties and passive income. the first step in achieving Financial Freedom is defining your goal.
second step is learning the numbers third step is learning the systems and forth is Implement and five is earn cash flow from those rental properties what is it that you want to achieve what’s your goal why do you want passive income what is your objective in gaining Financial Freedom with passive income do you want to quit your job do you want to save for retirement is it wealth preservation may be creating more wealth earning extra income for your family. I know that my goal is to quit my job I personally achieve that where I can quit my job with my passive income.
I have already surpassed my income from my job with my passive income from a rental property. let’s take a look at how you can do that. let’s just say you’re going to quit your job. the step number one is to find your target income remembering part one I had to go through the quick budget worksheet and on that could budget worksheet you can see all your expenses. that is a number that you need to keep your mind as we look at passive income and how we can quit her job with rental properties. along with the expenses that you currently have you need to add in any other expenses that you might need. if you’re quitting your job you may need to pay for your own health insurance if your employer is currently covering that if you have any possible desires that you want to get in the future maybe want to remodel your house.
maybe you want to buy a new car maybe want to buy a boat maybe you need to take care of your family member cuz they’re sick what about any possible future investing you might want to do. you want to continually grow your business. that you have more and more income every single month you need to save for that but if you want to take a vacation once a year that cost 5 to 60 thousand dollars we need to plan for that as well. you need a total all these items and that is the number Katy just a regular cookie cutter type home in a subdivision it could rent for $1,100 expenses around $800 to your cash flow every single month your rents minus expenses is $300 likewise. that’s a you buy a C or D quality single-family home the purchase price is around $40,000 3 bedroom 2 bath 2 car garage 1200 square feet built after 1930.
it’s a little older home the rents are less because of the quality of the home but let’s look at how you can actually still make money. the rents are 750 the expenses are 4:50 but after subtracting the expenses from the rents your cash flow after expenses are $300 as well and. you have two different types of properties but you have the same amount of cash flow and. these numbers are completely doable I know. What do you think about this free Investing course?
People might say hey where you can’t find a house for $40,000 special if you live in California are you can’t find one for $100,000 I beg to differ there many many places in the nation that you can find properties at this price that can rent for this step 3 is plan your escape from your job job is job just over broke your barely making enough money to make ends meet and. what we want to do is we want to plan our Escape.
let’s look at the scenario let’s say your expenses are $3,800 a month that you need in order to live off of you know your your rent your food your car paint your gas bill whatever might be all totally up to $300. to retire in 5 years with your expenses at $3,800 your yearly plan could look like this your one you buy one single-family home with $300 in monthly income Year to you by two single family homes with $300 in monthly income properties your for you by four more properties your V you buy 5 more single family homes at $300 a month in income and that’s actually very doable you might look at how am I going to be able to buy one the first year then to the next year then three of the next four of them 5 and uh.me of your thinking that that’s not doable that you can’t buy them any properties will trust me it’s very doable.
I’ve actually done it at year 5 I had 18 units that were bringing me cash flow every single month it’s very doable you just need to learn the tools of the trade in order to help you to achieve this. you’re five you have 15 single family homes with $300 a month coming in $300 x 15 it would be $4,500 extra each month that would bring in put in your pocket. how would your life change if you have $4,500 extra each month now remember this is not a get-rich-quick scheme this is.
That you’re going to work hard at that time you’re not going to.me people may tell you that you can be rich overnight is very well you could but I find UPS exception I’ve built my business from the ground up learning as I went and building a business that I currently make over $9,000 a month in passive income. how would your life change if you have $4,500 extra each month and you only did that after five years it’s very doable I think you can do it. after defining your goal the next step is to learn the numbers.
now I want to show you guys five different ways that rental properties will make you money the first way is net profit as the cash flow that comes in your pocket single month from the rent minus expenses second and third is appreciation for is equity buildup and five is tax advantages and we’ll look at each one. let’s take a look at the example property member this is the General cookie cutter looking for single-family home would be $100,000 down payment would be $10,000 or 1100 expenses are $750 a month and.
this is the example property that we talking about. all these numbers revolved around this property and I know what you might be thinking I don’t have $10,000 for a down payment well don’t worry their ways we can work around that there are plenty of ways to acquire properties without down payments that big you could even have one is as little as 3.5% but it’s not easy and you’re going to have to save money. remember this is not a get-rich-quick scheme this is.
it’s going to take time hard work but in the end it’s going to pay off huge. with his example 30 in mind to move on and look at it profit cash flow which means your cash flow every single month now from the prophet you look at multiplying that by 12 to get a yearly profit.
this is your any insurance payments that could be taxes I could be utilities that could be homeowners association fees whatever fees whatever expenses that come with the property you need a total all those up and subtract that from the monthly rent set 3 subtract the mortgage payment from what’s left over from the rents minus expenses and we’ll look at the numbers in just a second. don’t worry if I’m gone a little fast here.
Since you are going through this free Investing course, once you get the monthly rent subtract expenses subtracted mortgage. that equals the total monthly profit that you make now from the prophet you look at multiplying that by 12 to get the yearly profit. this is your cash flow monthly and yearly let’s look at that specific numbers here rents are $1,100 a month expenses $215 a month mortgage $535 a month your total cash flow would be $350 a month imagine if you had $350 extra each month in your pocket now multiply that by 12 you have $4,200 each year in your pocket as income now let’s look at what type of rate of return. the total invested is $10,000 your total yearly income is $4,164 at a way.
to find the percentage Roi return-on-investment you take the total amount you made / how much you actually spent to buy the property remember even though you bought it for $100,000 you only put $10,000 of your own money into the property. 4200 divided by 10000 is 42 which is a 42% return on your investment in one year can you believe that that’s move on. Equity capture Equity amount of money that you make when you buy the property. looks like a couple points that you need to remember.
You make your money when you buy the property you realize your money when you sell a property. you make your money which means you earned it there and then when you buy the property but you realize which means you actually put the money in your pocket when you sell the property or if you refinance the property and take the money out tax-free which that’s a whole other ball of wax that is going to be a game-changer for you in the future trust me. what does one single family home.
You are going through this free Investing course, and what does one single family home you purchase it at $100,000 but the market value because you bought it lower the market value of $125,000 equity capture is $25,000 really good $25,000 / $10,000 the down payment you put in is a 250% return on investment just from Equity capture can you believe that 250% return on investment crazy money being made in real estate next up is appreciation and depreciation is the value of your property after repairs are done and you fix it up and you’ve got it reappraised. you purchase property $400,000 you fix it up for $15,000.
Remember we already had the first appraised value is $125,000 but as we repair the property we get it painted we do landscaping we maybe change the flooring out or even just clean the carpets we put a $15,000 in the property that’s a total of $140,000 into the property from the appraised value and the cost of improvements. As in this free Investing course, when you get it appraised it’ll be worth more money let’s say for example it’s worth $180,000 – 3 value of $155,000 and the cost of improvements of $15,000. that is 180 – 140 which is $40,000 forced up appreciation just by fixing up the property that is a 400% return on investment because you take the $40,000 divided by $10,000 that you put in as a down payment.
Equals a 400% return on investment. crazy money being made in real estate. the next one Equity build up now this one is where as the tenants pay your rent you pay the mortgage company with those rents and that mortgage payment goes towards the principal of the loan amount you just borrowed let’s say again you purchased the property for $100,000 or down payment was $10,000.
Your initial loan amount is $90,000 for the entire year the amount applied to the principles $800 which means you’ve lowered the loan amount $800. the principal is paid down by $800 and you put $10,000 as a down payment that’s $800 that you brought them down. As you are seeing in this free Investing course, Equity build up basically as you’re paying down the loan amount on your property by the tenant paying the rent. they’re the ones paying it the last one in the five ways rental properties make you money is the tax advantages now the tax advantages can vary depending on each person because.
People may have a higher tax bracket than others but I want you to remember that your property goes up in value we all know that we see prices of homes go up and up and up but the IRS Internal Revenue Service who collects taxes says in their code that you’re probably actually depreciates in value.
they allow you as an investor to deduct the depreciation over 27 years to decrease your taxable income on average that’s about 10% tax savings. that’s another way rental properties make you money by Saving you on your taxes every single year. that’s another way that rental properties make you money just by Saving you money on your tax taxes every single year. let’s recap you five ways that rental properties making money the net profit or the cash flow every single month.
Your Equity capture your appreciation your Equity build-up and a tax advantages let’s recap let’s look at the numbers again from your $10,000 down payment 2% or 50% depreciation was 470% your Equity buildup is 8% on average 10% that’s a total first year return of 780%. In this free Investing course, Imagine putting $10,000 in the stock market and returning back 780% back crazy how much money you can make from rental properties all right now the third step is learning the systems of a rental property business. the first step is to find a property.
how do you do that number one would be a multiple listing service which is the MLS list all the properties that they’re trying to sell in one General list that all other Realtors can look at and you can get access to one of these lists through a realtor that can give you access to it or you can look up online there are.me free ways to get into the MLS but the MLS is going to have.me very good deals.me deals or not-so-good.me deals are great but the MLS is a great place to start another one is www.craigslist.com this is basically a for sale by owner but you’re going to find lots of properties that are not on the MLS on craigslist.com another great place to find properties is www.zillow.com now they’re going to pull from the multiple listing service MLS is also going to advertise for people who are trying to sell their property and it was not just for finding properties it’s also able to tell you how much it’s worth how much when was it last.
How much the taxes are it’s going to give you. much data on this property. you going to be really well educated on the one particular property now Realtors they are a fantastic way to find properties for you while you do not do any work but they are doing all the work. you get a realtor on your team looking for properties while you are doing whatever you want they’re the ones doing the work cuz they want to make a sale and get their commission and. you are able to do whatever you want go on vacation go play with your kids go to the mountains go ski and go to the beach whatever you want to do if they are still working finding you deals and it’s better to just cut bait and run you don’t want to have a property manager.
Realtors are terrific they work for you even though you’re not working there going to find your properties home inspectors and roof inspectors and electrical and all these different types of inspectors are great people to have on your team because they are going to help you find out what you need to do to the property or if the property is not worth buying contractors are there to help you estimate what the total rehab is going to be if their problems with the building the contractor is going to help you have a good understanding of how much the cost for repairs are going to be any men are great people to have on your team to there could be little projects that need to get done or you could even have a toilet leak in the middle of the night and a handyman can run over there and fix it for cheaper than a contractor wood title companies.
In the middle of the night and a handyman can run over there and fix it for cheaper than a contractor would title companies are great because they check to make sure that there’s no liens against the property is on cumbrance’s at the title is free and clear. that when you get it in your name. that when you buy the property there’s nothing that’s going to come and surprise you and it. title companies help to make sure that your properties free and clear. that when you buy it you can move right into rehabbing it and getting it rented out accountants are fantastic I absolutely love my accountant.
I give him all the paperwork and he does all the work he is fantastic you need to have a good accountant on your side lawyers are also great team members to have now you don’t necessarily need one to be on retainer but it is a good idea to have the number of a lawyer just in case. thing happens we looked at the first three ways of how to achieve Financial Freedom let’s look at the fourth step implementing your business. this is basically your homework there’s a few things I want you to do. what to implement will be learned in this many course you need to start by going and checking out the investment calculator that’s on my website www.masterpassiveincome.com for calculators you go to that link you’re going to find many calculators that are going to help you figure out if a property is worth buying and how much money you going to make I specifically created these calculators to help investors like you and me to run all the numbers and make sure that we’re going to make money recycling I want you to do is I want you to develop a mindset that is going to help you be rich. go to my website I have a book summary review of the richest man in Babylon It Was Written many many years ago it’s a fictional story that will help you learn how passive income will make you financially free it’s a fantastic book and you can read my summer review at Master passive income.com Babylon another homework you have is to create a financial statement. go to my website Master passive income.com Mini Mini 4 / mini and down unload the financial statement worksheet now this worksheet is going to help you figure out all your expenses all your debt all your income all your assets and basically.me it up altogether. that you can present it to any bank and they can see your financial history because they want to know how well you’re going to be able to pay back the loan that you’re borrowing from them. go there download the sheet fill it out and you’ll have that in your bag. that when you go to get loan you’ll have that right away the last thing I want you to go to www.zillow.com I want you to go there and look at your part 1 look at the area see what’s for sale get to know the numbers and get to know the properties in the area you need to know what they’re selling for what they’re renting for the size of the homes you just need to understand the market in order to jump into it cuz you don’t want to buy poorly in my opinion when I bought my first property I way overpaid and.
I should have known but I didn’t I didn’t know all this stuff I didn’t have. me body like me that was walking me through or teaching me every step of the way how to build a business and do it right. that’s your homework don’t feel like it’s daunting but you got to remember this is not a get-rich-quick scheme this is. me thing that’s going to take time it will get easier and easier as the years go by because you’ll make more money from your passive income that you can put into buying more properties which will help you to buy more properties and. on but you need to be diligent and do the work because if you don’t know if he’s going to do it for you you got to make yourself.
this concludes the making money with rental properties mini-course part 2 and I want to thank you. much for being a part of this many course I hope you’ve learned a lot and you’ve developed a lot of questions if you have any questions please go to my website contact me I’d love to hear from you I would contact form on there you can send me a direct email you can tweet me at MPIDustinHeiner
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