When looking to invest in a new rental property, it can be a challenge to determine the appropriate criteria to filter your potential options. A commonly used tool is the “10% Rule”. This simple mathematical formula can provide insight into whether you should pursue this particular property or not. Let’s break down these steps:
- Determine the average monthly rent of the prospective property.
- Multiply the average monthly rent by 12 to get the average annual rent income.
- Divide the average annual rent income by the asking price for the property.
If that number is equal to 0.10 or 10% or higher, then that property is worth pursuing. Any number that falls below 10% would indicate minimum return and can be crossed off your list, in the pursuit of more favorable opportunities!
As always, feel free to contact Secure Pay One- My Landlord Helper with all your property investment needs!
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