It appears that charging $1,000 in rent each month will only bring in $12,000 annually. The costs of the property, upkeep, taxes, etc. must then be deducted. I know that the property’s value can increase, but how does this support FIRE when your goal is to receive an annual income from your investments?
Investing in real estate can offer attractive returns, but it’s essential to consider both rental income and property appreciation. While rental income might seem modest after deducting expenses like upkeep and taxes, property values can increase over time, contributing to overall returns. This dual approach supports financial independence and early retirement (FIRE) goals by providing steady rental income and potential long-term capital gains when properties are sold.
Aim for properties that generate a positive cash flow after deducting all expenses (mortgage, taxes, insurance, maintenance, etc.). Even if $1,000/month seems low, finding a property with lower expenses or higher rental income can improve this.
As the property’s value appreciates, your equity in the property increases. This equity can be leveraged to purchase additional properties or reinvest in other assets.
You charge more than 1k/month in rent… or, if the place rents for 1k/mo then the mortgage should be $600 or so. If a place only nets $1k/mo, then the better option would probably be Airbnb/short-term rentals or building a portfolio of properties so you have 10 places instead of 1.
Most people have properties that cash flow at least a few hundred dollars a month to cover repairs, vacancies, etc.