Do you think you could get a 10% annual return from $100k?

[rnmcd]

The best investment I can come up with is buying a $100k property (house) and renting it for about $675 month. After property taxes and estimated maintenance the return would be about 6.6 annually.

Do you think it is possible to get a 10% annual return from $100k?

 

[Slacker]

Are you figuring in the property value growth? 6.6 sounds like a direct return on expenditures but the property will be worth more over time, of course it isnt as easy as that because you also have to allow for inflation........

 

[kranky]

I've read in a couple of places that you need to rent property for 1% of the purchase price (per month) to make it worthwhile, which would be a $1,000 rent in your example.

6.6% would be the best you could hope for, right? If it's empty for a period of time, or needs extra repairs, or the taxes go up, that would eat into the 6.6%. That's not enough return IMHO.

A 10% annual return could be achieved over time, but if you mean 10% for sure in the next year, there's no sure thing.

 

[ElFenix]

bonds.

 

[RobCur]

900-1000 would be a good price to rent it, and 1100 would be ok too as long as someone's willing to pay that price. With a little luck, you might just rent it for alot more then you thought.

 

[rnmcd]

^

 

[GasX]

Originally posted by: rnmcd
The best investment I can come up with is buying a $100k property (house) and renting it for about $675 month. After property taxes and estimated maintenance the return would be about 6.6 annually.

Do you think it is possible to get a 10% annual return from $100k?

There is ZERO leverage in your scheme. Let's buy two $100K properties instead with 50% downpayments:

Income: $1350
Mortgages: $800 - ($50K/15 years/ 5.5% * 2)
Property tax: ??
Maintenance: ??

Then factor in the appreciation on the property.

>>>>>10%

If you start with one property and scale up as you learn, you could easily top 10%. In fact, you can CRUSH 10%. But there is a fair amount of work involved.

 

[heartsurgeon]

your rate of return will reflect the "risk" you are willing to take

the riskier the investment, the greater the return.

historically, it has been "best" to invest in the stock market.
the best way to invest in the stock market is to have a diverse portfolio of stock (25-30) that cover a wide range of
businesses, or
invest in a index fund (mutual fund that does that for you)

over the "long haul" (typically 10-20 years) rate of return will be roughly 10-12% (using historical facts)

short term fluctuations wil occur
taxes and such need to be factored in

the idea is that you can't really expect reasonably to make a rate of return greater than that which is the average o the entire U.S. economy - hence the stock market.

by the way - don't forget insurance for your house...
the odd tenant that will trash the place and run off..
also don't forget potential appreciation of the house if you sell it, and the advantage of a mortgage with the tax writeoff of the interest (as well as your "operating" expenses"

probably, if you have a separate income, and other investments..diversifying is wise, and rental property is one way to accomplish this.
if your short on time, not the handyman type, and don't like dealing with crabby tenants-- easiest way to invest (over the LONG haul) is still a index mutual fund.

good luck. hope you do well.

 

[StageLeft]

Historically the market grows at about 10%, but it ain't doing so well these days. Really though it should pick up and may make up for lost ground.

Also though as others mentioned that property should rise in value and also in time the mortgage will be paid off, so then you've got a free income.