I had a client who came to town but two weeks ago and was showing me some property his friend had purchased from another investment group. We went to the home that his friend had bought and paid $99,000 for it. This particular investment company guaranteed rent for two years.
That particular house would rent for right at $975 a month that would total $11,700 a year in gross rent. Times that by two for 2 years and the total is $23,400. Sounds pretty substantial if you really look at, but it isn't. We charge around $55,000 for the exact same real state without the guarantee. So which ones a better deal?
When you look at the details on each deal ours saves you 40%. This is because of the quality tenants and the lack of inventory for the tenants. These homes usually rent before they're even done with construction. We just finished one in that area that was rented 2 weeks before it was completed.Your chances of going two years without rent is almost 0%. So let's add the numbers up and see which ones a better deal.
$55,000 plus $23,400 equals $78,400 total. So there property even if we'd payed the two-years worth of insurance(which we won't because we want to make our clients money) would still be $20,600($99,000-$78,400) more than that deal. I would say they are making out like bandits.
There is an insurance you can get that guarantees your rental payments from for six months a year. Oh yeah it even pays to get there tenant out if needed. The total cost $250.00 a year!
So if you want to pay $44,000 ($99,000-$55,000) more for house for guaranteed rent just remember nothing is free. If you're paying for it in the total cost of your home your is probably paying way too much money for that investment property.
So when you're looking at a deal that has a guarantee on it just be aware that that is already built into the price and will cost you a lot more money than you think. Brett young Valley Realty and
Rooftopinvestment.com
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