How do you know if a rental property will make enough cash flow before you buy? Budgeting is KEY. When breaking down a deal, it’s critical that you account for the costs of all capital expenditures (CapEx), maintenance, and repairs. Overlooking an important line item could easily put you in the red!
Welcome back to another Rookie Reply! In today’s episode, we’re going to show you how to budget for the everyday operating costs that come with owning rental properties, as well as how to set minimum cash flow requirements when analyzing a rental. Should you find a partner for your next house hack? We get into the potential advantages and disadvantages of joining forces with other investors. We also talk about the many tax benefits in real estate and whether you need a limited liability company (LLC) to maximize them!
If you want Ashley and Tony to answer a real estate question, you can submit a question here, post in the Real Estate Rookie Facebook Group, or call us at the Rookie Request Line (1-888-5-ROOKIE).
In This Episode We Cover
How to budget for everyday rental expenses, maintenance, and repairs
How to set minimum cash flow requirements when analyzing deals
The pros and cons of forming a real estate investing partnership for a house hack
How to distinguish capital expenditures from repairs and maintenance
Whether you NEED an LLC to reap all of the tax benefits of real estate investing
And So Much More!
(00:00) Intro
(00:31) Claiming Tax Write-Offs
(04:02) Budgeting for Property Expenses
(15:45) Partnering on a House Hack?
(23:42) CapEx vs. Repairs & Maintenance
(26:37) How Much Cash Flow Do You Need?
(32:37) Send Us Your Question!
Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/rookie-404
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212: Rookie Reply: Why "First-Time Home Buyer Loans" Aren’t What You Think
211: Turning Their Basement Into a $4,500/Month Money Making Machine w/Simon Murillo & Kristina Vaio
210: The Rookie’s Guide to Finding Private Money for Your Next Property w/Alex Breshears and Beth Johnson
209: A Beginner's Guide to Analyzing Big Deals & Building a “Bulletproof” w/Kenneth Donis
208: Rookie Reply: Time-Saving Real Estate Accounting Tips for New Investors
207: Working Towards Time Freedom "In the Trees" with 3 Treehouse Rentals
206: Rookie Reply: Biggest Red Flags of a Bad Contractor (and How to Fire Them) w/Amanda Salovitch
205: Puerto Rican Paradise, Arctic Abodes, and Building "Dream" Vacation Rentals
204: Rookie Reply: Do New Short-Term Rental Regulations Make Investing Risky?
203: The Ultimate Property Management Masterclass w/Expert Property Manager Karen Lane
202: Rookie Reply: Is a Cash-Out Refinance Taxable?
201: Quitting Corporate to Build a 23-Unit Post-Pandemic Rental Portfolio w/Gus Ofili
200: Scott Trench’s 10-Step Checklist to Buy Your First Rental Property
199: Post, Invest, Profit: A Step-by-Step Guide to Content Creating for Investors w/Kerwin Donis
198: Rookie Reply: What To Do When an Appraisal Comes Back Low?
197: From the Screen to Short-Term Rentals and How "Stargirl" Started Investing w/Brec Bassinger
196: Rookie Reply: How to Use Home Equity to Buy Rentals
195: Financially Free in 2.5 Years by Buying “Low Risk” Rental Properties w/Craig Curelop
194: Rookie Reply: 19 Best Real Estate Investing Apps We Couldn’t Live Without
193: How a College Dropout Got a Seat at the Millionaire Investor Table
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