Most investors use leverage (debt) to increase their total returns.
A conservative estimate for maintenance, taxes, and management. 3. Financing Your First Property how to make money buying rental properties
: Use a Home Equity Line of Credit (HELOC) or cash-out refinance on your primary home to fund your first down payment. 4. Risk Mitigation & Operations Most investors use leverage (debt) to increase their
To avoid "losing" money, you must calculate these figures before buying: What it Tells You Gross Income – Operating Expenses The property's basic profitability before debt. Cap Rate (NOI ÷ Purchase Price) × 100 The expected return on a property if paid in cash. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash Invested) × 100 The yield on your actual out-of-pocket money. 50% Rule Expect 50% of gross rent to go to expenses Financing Your First Property : Use a Home
: Rental property owners can deduct mortgage interest, repairs, insurance, and depreciation , which allows you to write off the value of the building over 27.5 years to lower your taxable income. 2. Essential Financial Metrics
: Typically require a 15–25% down payment and a credit score of 620–680+.
: Maintain a "rainy day fund" (often $10,000–$30,000) to cover unexpected major repairs like a new roof or HVAC system.