How Do You Make Money Off of Rental Units?


Quick Answer

Earn a profit from rental units by purchasing properties with cash, covering expenses with rental payments and committing to a do-it-yourself property maintenance plan. To earn a rental income of $50,000 per year, your rental units must produce a profit of at least $4,000 a month. Take steps to reduce the vacancy rate by renting units as quickly as possible.

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Full Answer

Purchasing rental units with cash lets you maximize profits from rental income. Obtaining rental property using loans means that mortgage payments cut into profits, and mortgages can also deprive you of the flexibility you need to raise rent. If you use a mortgage, select properties in areas where rental fees are a minimum of $1,000 per month or higher. Any rent you receive above your monthly mortgage payments and expenses is profit.

Rental properties require constant maintenance. If you don't want to perform yourself, negotiate with service contractors to handle these tasks. You can choose to handle all of the management and maintenance duties to save money, but this typically requires being on call 24 hours a day to meet renters' needs. Keep vacancies low and minimize unit turnover by renting to quality tenants who are likely to stay for long periods of time.

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