reno investors and first time home buyers: great news--cashflow is possible again!

If you are a first time home buyer and/or an investor and you bought in the starter home market ($70,000-$150,000) CASH FLOW is becoming a reality again. 

Three years ago people had virtually zero chance of earning money from cash flow (what you get for rent is more than the mortgage) when they bought a home, the reasoning was you don't buy a home for cash flow but for future equity. 

What happened was you bought a home for $300,000, mortgage payment was $2,000 and market rental rates was $1,300.  Say, you decide you wanted to rent out your home, you'll be $700 negative every month.

We learned this was not a reliable strategy.

The reason why it may not be a good move to buy based solely on future equity is what happens when future increase in home value does not happen? The result is what we're seeing now.

The current prices of homes makes it possible to hit two birds in one stone--future equity and cash flow.

Example: You bought a $120,000 home

Purchase price:$120,000

Mortgage payment:  $798.36

Rental rate: $1,100

Positive cash flow: $301.64

Possible equity every year: at 4% a year

1st year: $124,000

2nd year: $128,960

3rd year: $134,118

4'th year: $139,482.97

5'th year: $145,062.28

TIP for investor: Consider rent-to-own programs.  Make it a truly win-win situation for both you and the buyer.