Q: We’re moving to a new home because our family has grown and we need more space. We have the means to buy our new home and keep our existing home as a rental–would it make sense to do that? Wendy, Penns Grove, NJ A: 1. You can verify your home would generate lots of good tenant prospects. Tenants want the nicest place to live they can find just like homeowners (good schools, low crime, access to transportation are normally a plus). It’s a good idea to test the market with a rental ad 2. Positive cash flow. Owning any property, particularly a rental will generate expenses as well as capital improvements. Positive cash flow if put aside for a […]
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In order to increase rental income, install coin or card-operated laundry machines in your property’s common area.
continue reading Q: Gerald, my wife and I are looking at rental properties to buy. What’s a good cap rate for a rental property? Doug, Little Falls, NJ A: Great question. Let’s start by defining what cap rate (capitalization rate) is. A capitalization rate is the percentage of return from an investment when you divide the Net Operating Income (NOI) by the price you are paying for the property. Cap rates do not consider the costs of financing into the investment equation and in my opinion cash-on-cash return is a more useful statistic for a real estate investor. But since some buyers use financing and some buyers pay cash, cap rates are used more often because it allows you to make an […]
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