: Buy a 2–4 unit property using an FHA loan with only 3.5% down. You must live in one unit and rent the others to cover the mortgage.
: Rental property owners can deduct mortgage interest, repairs, insurance, and depreciation , which allows you to write off the value of the building over 27.5 years to lower your taxable income. 2. Essential Financial Metrics how to make money buying rental properties
To avoid "losing" money, you must calculate these figures before buying: What it Tells You Gross Income – Operating Expenses The property's basic profitability before debt. Cap Rate (NOI ÷ Purchase Price) × 100 The expected return on a property if paid in cash. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash Invested) × 100 The yield on your actual out-of-pocket money. 50% Rule Expect 50% of gross rent to go to expenses : Buy a 2–4 unit property using an FHA loan with only 3
: For a fee of 8–12% of monthly rent, management companies handle day-to-day headaches, though this reduces your immediate cash flow. Cash-on-Cash Return (Annual Cash Flow ÷ Total Cash
: Qualification is based on the property’s rental income rather than your personal salary, allowing for faster scaling.
: Typically require a 15–25% down payment and a credit score of 620–680+.
Most investors use leverage (debt) to increase their total returns.