There are a few bloggers and real estate hype-men that promise you that making money by renting houses out is quick and even easy. Saying that they make money hand over fist month after month and that it’s basically like an annuity payment.
There are some that say they make $5,000 in 5 hours!
There’s a couple problems with these claims.
Yes I own rentals and most of the time I receive my money every month without too much of a hassle or too many man hours. With that said I own real estate in the nicest neighborhoods in Metro Detroit and Chicago city. Yes, for the people that hate Detroit there are very affluent,
and safe areas in and especially around the city.
I’ll use myself as an example:
If I receive 10k a month in rent payments (which I come close to every month, post on that coming soon) and I only have to be on the phone for an hour that month calling my property manager, and spend an hour at a house meeting with a contractor, that doesn’t mean I made 10k in 2 hours.
If I could make 10k in 2 hrs. extrapolate that over a full work week. This would make me damn near 10 million a year. I know for sure I wouldn’t be here writing this I’d be in a tax haven and not telling anybody about it.
When people say they only had to do a few hours of work this month and made thousands. Sure it’s true but you are not making that money consistently over every hour or the work day.
In the example above making 10k a month if it were the only thing I did for income and was my full time business it would equal to $62 an hour or the example in the title of this article would be $31 an hour.
No one is going to write an article bragging about how they make $31 an hour or 60K a year.
They also aren’t taking into account all of the repairs and labor they had to do the previous months before. A personal example again, I had to repipe part of a rental property when I bought it and do some serious plumbing repairs. That ate into my profit that month. I made 4k less
after that bill and I spent hours there with the contractor trying to solve this problem and watching them rip open the walls. Those examples are rare but the example is given to show that there will be times when your returns fluctuate and its not all gravy.
This business is not easy or quick. I have most of my properties paid for which is a huge advantage.
Also if you have less than 10 properties and you have a vacancy or 2, or a major repair. That can drastically hurt your business.
You will be juggling swords trying to pay all of the mortgages and make repairs, tax, and insurance.
Don’t fall into this trap that it so easy or you’re going to get rich in real estate. Unless you own hundreds of houses it will be very difficult to make thousands of dollars an hour.
But that is what we’re striving for!