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Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 4 months ago

What's the typical net profit on a given gross rental income?

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  • 4 months ago
    Favorite Answer

    There is no typical amount.

    You'll make more profit monthly if the house is paid off vs having a mortgage. But if the market does well in your area you could end up making a ton of money even if you never make a profit on monthly rent.

    Example, I rented from a nice old man a few years back. He bought an old house on 4 acres just outside of town in the middle of the last housing downturn (in 2011) - he paid about $300k for it. Rented it out for 8 years and earlier this year (2019) he sold it to a developer for $1.3 million.

    So even if he never made a dime of profit from rent, he made about $1 million just by holding the property for 8 years, or about $125,000 per year or $10,000 per month (rough numbers).

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  • Anonymous
    4 months ago

    There is no typical.

    Profit comes in different forms such as appreciation of the property, not just the rental income. 

    Some properties can be very profitable even though they are cash flow neutral (or even negative).

    Other properties can leave you with a capital loss even if there's good cash flow from rent.

    In terms of appreciation, you really don't know what your profit is until you sell. 

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