Will Rent Receipts Cover Expenses?

What a good question!  It's exactly what every would-be investor should ask before buying anything.  Well, maybe not exactly.  Specifically what you want to ask is will the rent receipts cover mortgage payment, lost income from cash you invested, property taxes, property insurance, say a five percent allowance for maintenance and repairs and another five percent for vacancies or uncollectable rents.  And will there be something, however small, left over for your profit?

After you've figured out how much all those expenses are likely to add up to, compare the result with the rent you can expect to collect.  To set the rent figure, start thinking like a prospective tenant.  Find out what comparable places can be rented for in that neighborhood, to get an idea of how much you might be able to charge. 

My best advice is to go to the library, or even a book store, and get a couple of books like "Landlording", or maybe  "Real Estate Investment for Dummies."  Start studying.  Then line up your own real estate broker, lawyer and tax professional, because as an investor you should plan on using all three.  So oh yes, you'd better add something for professional help to your list of estimated expenses.