How Much Money do you Need to Buy a Rental Property?

More information and numbers in this article:

Buying a rental property can take a lot of cash, even when you are using financing to help with the costs. Most investors will have to put at least 20 percent down, plus pay closing costs, and have reserves for the bank. If you make repairs on a property that will add to the money needed. There are some ways to buy with less money down that I explain in this article:

How to Buy Investment Property with Little Money Down

Here is a link to my amazon author page with my books:

19 thoughts on “How Much Money do you Need to Buy a Rental Property?”

  1. Mark, do you have a video that goes over the pros and cons of renting out a home that is paid off vs a home that still has a mortgage?

  2. so you buy a property and with 20% down you’d have 80.000 debt. is your income from your tenants higher than your loan payment? is that how it works?

  3. I ma buying my 1st investment property . About 60K with very minimum TLC.. you're video is really great and lots of good information . Thanks

  4. Obviously you're a Real-Estate person so this may be hard for you to answer unbiased. So I was fortunate enough to be setup a Trust Fund from my great grand parents to cover schooling costs. And so I'm in a 2 year Construction Program right now and will be graduating at the end of this school year. But anyway, I should have between 100-130k dollars after I get out of school and keep a little bit of money to help with life and may have to buy a vehicle of sorts down the road. So back to the point. I need to find a way to make this money keep working for me. And I could do the stock market / investment funds of that nature. But do you think more realistically that this money could better be spent in Real-Estate whether it be a rental property or flipping property? Or maybe a little bit of both? And hopefully going to school for general construction and maybe getting a couple years experience under my belt will help because I would be able to fix any non major problems in a flipper or rental property or at least identify the problems that may become an issue. The problem is being young I will probably not be able to really qualify for any major loans. And if I do it will probably be for my personal house if I don't rent. I think being a construction major / having a passion for it I will have more 'control' over my investments in realty vs a stock market, but 100 grand could buy myself into some nice stocks too. Both have their risks, both have their fees associated with them. Maybe flip a couple houses myself until I can get 200-300k built up in cash and then buy 2 rental properties outright that may make roughly 1500 a month so I could get 3 grand a month and work on top of that for additional income and maybe at that point qualify to buy another rental or two. Also, I live in a college town, obviously, What's your opinion on renting to college kids? Or, what do you think about vacation rentals where you charge by the night or by the week? I know my aunt has a place by Lake Tahoe where she does that. I was actually born outside of Denver in Westminster I believe. And I have 2 sisters that live in Colorado, and my dad used to live in Greeley for like 10 years before he moved out a couple years ago. And so I wouldn't mind moving back in the area. But the prices as you obviously know are extremely expensive for anything with a little space to them. I don't know if I'm missing anything. Well, one more question, what's your opinion on if someone were to buy a rental property that may be in a different state or a good 4-6 hour drive away and trying to handle everything from a distance or letting a property management firm take over? This is a lot of questions so I'm just gonna leave it at that. But basically, if you were in my shoes, what would you do?

  5. Hey Mark, I am looking to buying and living in the property for the required amount of time and then renting it out. After the required time has passed, can I rent it out on my own or do I need to report that?

  6. Way back in 2002, my mom bought a Michigan condo for $165,000 and then suddenly died, leaving it to my brother and I as T.O.D. We tried selling it, but the market was bad, so then we started to rent it in late 2004, and my brother also died around the same time. I tried to sell it numerous times, but the market never came back until recently. I finally sold it last year for $135,000, and so I assumed that I wouldn't owe anything on it, in fact, I would have taken a $30,000 loss.

    HOWEVER, my accountant shocked me with a last-minute total bill of about $28,000 to the IRS, the state of Michigan, and for paybacks for Obamacare tax credits and penalties for exceeding my income threshold!! He told me that he had computed the depreciation payback USING THE ENTIRE COST OF THE CONDO AS THE BASIS ($165,000) and then assuming it was rented the entire time (it was not rented until late 2004), so he came up with 14 years * ($165,000) * 1/27.5 = $84,000 in depreciation that I owed!!!

    I learned how depreciation works overnight last Wednesday, 11-Oct-2017, then I went back and discovered that the annual depreciation that THEY have been accounting for over the years was only $5919, not the full $6000 that you get when dividing $165,000 by 27.5. Also, I discovered that this $5919 was not based upon a $165,000 cost, it was based upon a ratio of land to building, which came up to 12.2% off the $165,000, and there were also startup costs added into the equation. And also, we didn't even start taking depreciation on it until late 2004.

    When I called him back the following day and reported these numbers/dates, he recalculated it to now be around $1,600 (vs. $28,000)!!!

    These people are professionals, and they do this for a living. My obvious questions for you are:




    I SMELL A BIG FAT RAT. I now believe that these guys were trying to pull a fast one on me… EVERY YEAR, they wait until the last day to finish my taxes, leaving me no time to even look at them to check for errors. They also have me fill out duplicate forms because they tell me that my identity may have been stolen, so one is for e-filing, and the other is in case the e-filing fails.

    I now think that they were going to either send the IRS a different set of forms or they were going to make an after-the-fact revision and then somehow intercept the refund, because it is not possible for them to have computed my taxes by such primitive techniques and reckless assumptions.

    Am I just being paranoid??

  7. Great video! Need your advice..i am about to buy my 1st property as a rental and pay cash with 35k that i borrowed from my 401k.. my plan is to fix home then rent it out and refinance. and pull 35k out.. (home should appraise at 60-70 after repairs cash flow should be about 400-500 on first home) i want to then find another in that 35k price range and do the same thing over and over…then finally with last refinance pay off the 401k loan which is costing me 700 month @5%.. Any flaws with this plan? Or potential major problems im overlooking?

  8. How much should I keep as an emergency fund? I have the cash to buy this rental property but would leave me without an emergency fund.

  9. I have a question …. Do I buy a home for 150k-160k as rental or buy a condo for 100k-120k? Cash flow almost the same after mortgage payment and property management?

  10. Mark, I have really been enjoying your videos. Will regular banks allow this scenario? Move out of my home that I have been living in for the past seven years which has a 30 yr. conventional mortgage (currently 81% LTV) and use that as my rental property while I purchase another home as to be my new main occupancy house and get an FHA or conventional loan on that with the minimum required % down?

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