I wasn’t always into the idea of investing in a rental home. I get the appeal—buy a home and you own that asset… one that appreciates! Sell it and get that money back, maybe for huge profit. Live in it, and your money becomes an investment instead of monthly rent payments you won’t ever get back. Rent it out, and you pocket some cash each month.
But it seems like a hell of a lot of work.
Which home do I buy? How much will it appreciate? What sort of mortgage program is best? How long do I have to rent the home before buying it becomes profitable? WTF is PMI?
I’ve learned there is most definitely not a clear answer to any of these questions. And getting any answers at all takes a lot of time and effort. But somewhere along my lengthy and confused journey to learn about real estate investment, I realized this: investing in a rental home is beyond all doubt one of the most OUTRAGEOUSLY SMART things you can do with your money.
Why? It’s all about the math! It may be confusing, complicated, and hard-to-get, but the numbers show that starting a portfolio of rental properties is such a clear, guaranteed financial win that you’d have to be a dog stuck in a bush to pass up a good home-buying opportunity.
The good part
Because the math is so useful and compelling, BUT ridiculously hard to figure out if you aren’t some kind of wizard, we at Roof decided to make a better solution for planning an investment. We created a tool that makes figuring out the math simple, while also educating people about it along the way.
Plus, it’s actually free. No ads. No trial version. No weird shady shit.
Just enter data into the fields and the tricky stuff is calculated for you as you type. You can figure out your exact monthly costs and monthly revenue while taking into account all the tricky details like mortgage interest rates, tax depreciation, and PMI (it stands for personal mortgage insurance, by the way).
And on the topic of explaining things, you can click on any of the items to learn exactly what it means and how it plays into the calculation. We even threw in some helpful links! Thanks, Investopedia!
Wait! There’s more.
Planning an investment is way more fun when you can actually see ahead of time how it will perform. So the app also builds a spreadsheet for you based on the data you enter that shows you exactly how much you will spend and earn each month in the future, along with your total profit. (Spoiler alert: your investment on a rental home can become profitable overall WAY before you even own the entire home)
In fact, investing in this $220,000 home purchased with 15% down, rented out at $2,000/mo and a 20 year mortgage… becomes profitable at just 45% equity, in less than 7 years! Including insurance and maintenance costs!
Now go check out the app and start planning your next home investment. You’re gonna love it. Let us know if it helps you in buying a home, or just share your thoughts on the tool so we can make it better!
Want to learn more about Roof? In short, it’s a beautiful tool for landlords that makes managing your rental homes super simple. Your tenants can even use it to make living with roommates more enjoyable, so everyone wins.
Check out www.roof.io for the whole scoop.