“The rule of thumb is that you want to make two hundred dollars a door. If you’re going to make less, your property will potentially be too sensitive to the basic maintenance and daily ongoing expenses.” -Christina Suter
Today I am sharing with you how cash flow differs in a primary market like Los Angeles versus a tertiary market like Indianapolis . As someone who has and continues to invest in multiple markets, I’ve found that in tertiary markets things can be a lot more sensitive when it comes to the basics like repairs and maintenance. The rule of thumb for this formula is the one percenter and it means that your gross monthly rent should be 1% of your mortgage. The cash flow from each market using this formula changes drastically because maintenance and repairs for each market will generally cost the same, however my cash flow for Indianapolis will take me a lot longer to accumulate for those repairs in comparison to Los Angeles.
Topics Covered in this episode:
- What is the one percent rule and how do you use the formula
- What is a primary market
- What is a tertiary market
- What is positive cash flow
- Should you hold your property for appreciation
- Why tertiary markets are more sensitive
The Real Estate Breakthrough Show with Christina Suter is where we talk about the reality of real estate, the mindset you need and the tips and tricks to get you moving forward in investing. Join us every week and learn everything you need to know to invest in real estate education and create real wealth for a lifetime.
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