Are you a savvy success-driven woman who wants to secure your financial future with a rental portfolio? Not only can you build long-term wealth through your rental properties, but you also get to be your own boss and call the shots. As someone who’s been in the real estate game for a while, I know how intimidating it can be to start building your rental portfolio. But trust me when I say that the rewards are worth it!
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Why are YOU investing in rental properties?
One thing that I know for sure is that there will always be renters. This means there will always be a need for rental properties, and this puts landlords at an advantage. The other thing that I know for sure is that a buy and hold portfolio will increase in value over time.
Investing in real estate can be a lucrative and rewarding investment. With carefully chosen properties you'll have access to predictable cash flow, excellent returns on your investments as well as opportunities for tax advantages or diversification if needed!
Your portfolio might even grow with this solid ground beneath it allowing you to leverage your properties into even more money.
One thing that I know for sure is that there will always be renters. This means there will always be a need for rental properties, and this puts landlords at an advantage. The other thing that I know for sure is that a buy and hold portfolio will increase in value over time.
Investing in real estate can be a lucrative and rewarding investment. With carefully chosen properties you'll have access to predictable cash flow, excellent returns on your investments as well as opportunities for tax advantages or diversification if needed!
Your portfolio might even grow with this solid ground beneath it allowing you to leverage your properties into even more money.
1. Cash Flow
Cash flow is the difference between the property’s income (collected rents) and all monthly expenses.
Let’s face it, Landlords are in the rental property business to make money. And yes, it is a business, and yes, you want positive cash flow at the end of each month. The critical word here is “positive”.
It would be best to learn how to calculate your cash flow each month after paying your mortgage, taxes, and insurance (PITI). Don’t forget to put aside money each month for cash reserves to cover: Vacancy Rate, Repairs, Capital Expenditures (relacing the roof, HVAC plumbing, etc.), and Management Fees (if you are self-managing, then pay yourself).
Cash flow is the difference between the property’s income (collected rents) and all monthly expenses.
Let’s face it, Landlords are in the rental property business to make money. And yes, it is a business, and yes, you want positive cash flow at the end of each month. The critical word here is “positive”.
It would be best to learn how to calculate your cash flow each month after paying your mortgage, taxes, and insurance (PITI). Don’t forget to put aside money each month for cash reserves to cover: Vacancy Rate, Repairs, Capital Expenditures (relacing the roof, HVAC plumbing, etc.), and Management Fees (if you are self-managing, then pay yourself).
2.) Appreciation
As a landlord, the term appreciation refers to the increase in the value of a property over time. The longer you hold a property, the more appreciation you should expect to receive. The national average appreciation rate is 3% – 5%.
Of course, you need to consider neighborhoods when choosing your rental. Some areas will naturally bring you more appreciation than others. If appreciation is your primary goal, then select your areas wisely.
You can also increase the value of your property by keeping up with maintenance and making upgrades during turnovers to the bathrooms, basements, kitchens, etc. Remember that this is your investment property, so don’t let it run down by cutting too many corners. And don’t skimp using cheap materials that will not stand up to normal wear and tear. You will only find yourself making repairs more often and spending more money in the long run.
As a landlord, the term appreciation refers to the increase in the value of a property over time. The longer you hold a property, the more appreciation you should expect to receive. The national average appreciation rate is 3% – 5%.
Of course, you need to consider neighborhoods when choosing your rental. Some areas will naturally bring you more appreciation than others. If appreciation is your primary goal, then select your areas wisely.
You can also increase the value of your property by keeping up with maintenance and making upgrades during turnovers to the bathrooms, basements, kitchens, etc. Remember that this is your investment property, so don’t let it run down by cutting too many corners. And don’t skimp using cheap materials that will not stand up to normal wear and tear. You will only find yourself making repairs more often and spending more money in the long run.
3.) Net Worth / Equity
Just what is the net worth of your investment property? In simple terms, Asset (property value) – Liabilities (outstanding mortgage) = Net Worth. Each month as you pay your mortgage, the principal will decrease, and that property's net worth/equity increases. For example, if your property could sell today at $200k and the balance of your mortgage is $140k, then the net worth of that house would be $60k.
If you do sell, you will also take out settlement costs, realtor fees, etc., to calculate your actual profit. It is an excellent practice to keep a financial balance sheet each month to track your bottom-line net worth.
Just what is the net worth of your investment property?
In simple terms, Asset (property value) – Liabilities (outstanding mortgage) = Net Worth.
Each month as you pay your mortgage, the principal will decrease, and that property's net worth/equity increases. For example, if your property could sell today at $200k and the balance of your mortgage is $140k, then the net worth of that house would be $60k.
If you do sell, you will also take out settlement costs, realtor fees, etc., to calculate your actual profit. It is an excellent practice to keep a financial balance sheet each month to track your bottom-line net worth.
4.) Depreciation
Rental property depreciation is an essential tool for landlords. It will allow you to deduct the costs from your taxes of buying and improving a property over its useful life and will help to lower your taxable income.
Depreciation begins when the property is available to use as a rental. Residential rental properties are depreciated 27.5 years. Only the value of buildings can be depreciated; you cannot depreciate land.
You work hard for your money, and you want to keep as much as legally allowed. It is critical that you use a CPA who handles real estate investments. They will help you with strategic tax planning and can help you to save thousands on your taxes. This is not an area that you want to cut corners on. Pay a good CPA that has your best interest in mind.
5.) Retirement Plan
With pensions becoming a thing of the past, you may be faced with the task of saving, investing, and planning for your retirement.
With the right strategic planning you can set yourself up for retirement by building a rental portfolio.
Rental properties can add an extra stream of income for your retirement and possibly provide enough income to allow you to retire sooner.
With pensions becoming a thing of the past, you may be faced with the task of saving, investing, and planning for your retirement.
With the right strategic planning you can set yourself up for retirement by building a rental portfolio.
Rental properties can add an extra stream of income for your retirement and possibly provide enough income to allow you to retire sooner.
6.) Generational Wealth
Investing in rental properties can be one of the most effective ways to pass along your wealth to future generations and achieve portfolio diversity.
When properly managed, this option offers long-term passive income, making it an excellent choice for investors who want stability over time while building generational wealth.
As an extra bonus, one big perk you get from having a successful buy & hold business is the freedom it can give you.
When you learn to automate your business properly using the right tools and having the right policies and procedures in place you can work from anywhere using your phone or a laptop.
Keep Moving Forward
I Believe In You!
“
“Choose your properties wisely.
You want money makers, not money takers.”
Mary Jo Whelan
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Mary Jo Whelan is a leader in the field of residential property rentals. She owns and runs a property management and renovation company in Baltimore.
Mary Jo started with no money, college education, or job. From these humble beginnings, she has grown her company to manage over 100 rental properties and manage over 50 rental renovations ayear.
She co-facilities a monthly landlording strategy meeting for a local REI group and is the past president of NAPRM, National Association of Residential Property Managers.
Mary Jo is also the founder of Lucrative Landlording for Women, an exclusive community for success-driven women landlords. Lucrative Landlording provides an elite coaching program, masterclasses, and networking events designed to help women landlords maximize their cash flow and keep high-quality renters.
Mary Jo is passionate about helping women landlords succeed in the field of landlording, secure their financial future, and create generational wealth.
In her spare time, she enjoys practicing techniques for furniture painting, gardening, and traveling. And yes, just for fun, she actually jumped out of a perfectly good plane.
The content presented in this blog is provided for entertainment and educational purposes only and does not constitute legal or other professional advice on any subject matter. Lucrative Landlording provides information it believes to be accurate, however, Lucrative Landlording makes no representations or warranties about the accuracy or completeness of the information contained on this blog.
