Far too many ‘investors’ neglect one of the main things that will put them out of business. Their customers. Like it or not, no matter how genuine a tenant sounds in the showing, when they are behind on their rent, they can be as mean as a snake.
I see it all the time: A prospective landlord looks at the numbers and says, “Rent will be $1,000 a month. My payments will only be $800; I can pocket the rest.”
If you are any type of investor, at least one who reads here, you know that this is a losing proposition. There is $200 worth of cash flow — before expenses. After expenses of 50%, there is a negative cash flow of $300. And they are even managing the property for free.
But to the naïve investor, on the surface it looks OK: $200 a month in your pocket. And that is if you get a renter, if you get a renter who pays, if you get a renter who doesn’t damage the place, and if you do not have any vacancy.