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If the investment property needs repairs, you should add those to the purchase price first and then multiply that figure by 1%.
As an example, let’s use a property with a purchase price of $150,000. To follow the 1% rule in the scenario, you would use the following equation to determine the minimum amount you should charge in monthly rent:
$150,000 x 0.01 = $1,500/month
If, however, you need to spend about $10,000 on repairs, you would add that to the cost to get a figure of $160,000. To follow the 1% rule, you should multiply that figure by 0.01 or move the comma two spaces to the left to get a monthly rent of $1,600.
The real estate strategy that makes the most money is likely to be an investment property (or properties). One way to earn money in this way is to purchase a property and rent it out to long-term tenants. Another way is to buy a multi-unit property or small apartment building.
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This article was originally published by a www.mpamag.com . Read the Original article here. .