What is a Good Return on a Rental Property?

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What is a Good Return On A Rental Property? Is it 10% 20% 30%? How do we even measure the return on investment? Which rate of return is the best?

The quick answer to this question is... IT DEPENDS!

It Depends HEAVILY on your goals, your financial needs, and the type of property you invest into. What may be considered to be a good return for your friend may not be a good return for you! If you want to determine what is a good return on a rental property, you first need to decide what your aim and goals are.

There are FOUR different ways to create a return on a rental property! Here are ways to determine whether you have a good return on a rental property.

1. Cash Flow - a good number for a cash on cash return is greater than 8%. Part of calculating this type of return requires understanding how financing works. To calculate your loan payment, you can use a free app such as Karl's Mortgage Calculator. Remember, your NOI (Net Operating Income) is NOT necessarily the same thing as your cash flow.

2. Principal Pay-Off (Equity Buildup) - another way to measure a return or earnings on your rental property is to figure out how much equity you're building through paying off your mortgage. This focus is typically favored by individuals that don't cash flow right away but are looking to build long term wealth.

3. Appreciation - As the property value increases, your equity position goes up and you're becoming wealthier. There are 4 different ways to create appreciation: Passive, Forced, Phased, and Earned Appreciation.

4. Depreciation - This is a tax benefit that you can take as a real estate investor. This focus is great for high-income individuals that are looking for tax shelters. Real estate is a phenomenal way to reduce tax liabilities.

A Good Return on a Rental depends HIGHLY on your goals, long term financial vision, and what your lifestyle choices are. There are no "good or bad" returns - only the right returns for you!

#roi #rentalproperty #passiveincome

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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)

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Christopher Dorsano - Creative Director

---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.
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What do YOU think is a good return on a rental property? Comment Down below!

TheKwakBrothers
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What do you think would be a good COC % for a turnkey sigle family home?

pipesarayoficial
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Can you explain how depreciation is a ROI at that level? I can see how one might calculate that a depreciation write-off of $26k saves me (obviously it depends on along of different tax situation) about 9K in taxes. I feel a case could be made that that 9K is an ROI although even that is a little short sighted because when you sell you will just make that depreciation back and then pay the 9K in taxes again losing the ROI. I am also ignoring 1031 exchanges and front loading depreciation with a cost segregation study among other things that could muddy the water. Please help.. I'd like to be able to explain to my investor partners when they ask me why depreciation is calculated into their expected returns. Thanks!!

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