Ask HTM - Moving Back In With Parents, An Employer Paid MBA Catch, & Going From Condo to Real Estate Mogul #874

Profitability

Matt Altmix and Joel Larsgaard discuss the potential profitability of renting out a condo. They emphasize the importance of understanding the mortgage terms, such as whether it's a 15-year or 30-year fixed mortgage, as this can significantly impact monthly cash flow 1. Joel highlights that while a 10% profit margin might seem appealing, it doesn't account for expenses like vacancy and repairs, which can reduce actual profits 1. Additionally, they advise considering the long-term appreciation potential of the property, especially in high-cost areas where cash flow might be limited but property values could rise substantially over time 2.

Not every property is created equal. Financing terms are an important factor to consider.

--- Matt Altmix

They also caution that being a landlord is more of a part-time job than passive income, and one should be prepared for the responsibilities that come with it 2.

   

Challenges

Joel and Matt delve into the real-life challenges of being a landlord, such as dealing with vacancies and maintenance issues. Joel shares his personal experience of having potential tenants back out at the last minute, emphasizing the need to plan for such financial lulls 3. Matt adds that while cash flow is important, one should also consider the potential for property appreciation, especially if the condo is in an up-and-coming neighborhood 3. They suggest that if you believe in the long-term value of the property and are prepared for the responsibilities, holding onto it could be a smart move 4.

You might not be predictably making money every single year with this particular property.

--- Matt Altmix

Ultimately, they recommend creating a checklist of factors to consider, such as mortgage interest rates and personal financial goals, before making a final decision 4.