There is a four unit property listed in Antioch, CA right now for $229,000. Each of the four units supposedly rents for $900 per month.
This property can be financed with a 25% down payment and loan at about 5%. PRICE: $229,000; DOWN: $ 57,250; LOAN: $171,750; P&I: $922/month; Taxes: $238/month; Insurance: $100/month.
TOTAL PITI: $1,260
TOTAL RENT: $3,600
This property will generate $3,600 in monthly cash flow, and the monthly payment will be only $1,260. That is a monthly cash flow of $2,340, or $28,080 per year. Even with very generous allowances for vacancies and maintenance costs, this property offers a phenomenal return on cash invested.
With closing costs and down payment, “out of pocket” might be about $65,000. And, this property could easily generate over $20,000 in net cash flow after all expenses and vacancies. That is a 31% return on cash invested. Leverage at its finest.
Our point is that for those of you looking for rental properties, residential units often offer far better returns than Single Family Residences.
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