Real estate investing is traditionally the best way to leverage your assets, time and involvement. Many smart investors
start out with an investment single family residence, condo or duplex, then,
after experiencing success with that type, continue to
build on their success buying similar types of units. This creates a
"money machine" effect, where you build on your strengths and experience by
repeating past successes.
Other smart investors like to
gain traction with smaller units, then work with
larger properties, such as triplexes and fourplexes, utilizing the same techniques but
leveraging their base investment even more with larger properties.
Here is an example (*):
|
SFR |
DUPLEX |
TRIPLEX |
FOURPLEX |
| Purchase |
$500,000 |
$650,000 |
$800,000 |
$1,000,000 |
| Initial Investment (**) |
$137,500 |
$178,750 |
$220,000 |
$275,000 |
| GRM |
20 |
17 |
14 |
12 |
| Monthly Rent |
$2,083 |
$3,186 |
$4,762 |
$6,944 |
| Monthly Expenses |
$625 |
$956 |
$1,429 |
$2,083 |
| Monthly Net |
$1,458 |
$2,230 |
$3,333 |
$4,861 |
| ROI |
13% |
15% |
18% |
21% |
- (*) Assumes similar construction quality, condition and neighborhood
- (**) Including 25% Down Payment, + 1.5% Closing Costs and 1% Rehab
|
