A couple is in the process of getting married.
Evaluating pros and cons and calculating scenarios is something they like doing together. A business plan is written.
They happily agree to focus on developing the down payment funds to purchase a modest duplex. Sharing their plan with family and friends develops good feedback. Some decide to contribute significantly to the young couples efforts as a wedding gift.
After a good bit of study, they zero in on a property.
$250,000 asking price. Good neighborhood and general area. No issues, property is relatively new.
3BR, 2BA rents for $1,400 each side.
PITI estimated at $1,500.
Property management fee for the rented side is $140. Landscaping $150. The property manager takes care of the renter and the unit, and the landscaper takes care of all the yard; keeps the outsides nice.
$1,790 expenses – $1,400 rent income = $390 out of pocket per month to reside at the duplex.
The industrious duo intends to save aggressively to purchase a new future home and convert their half of the duplex into a rental unit. After three years, they have the down payment.
Now the duplex rents for $1,500 each side. $3,000 per month rent income.
Expenses are $1,950. Cash flow from the duplex is $1,050 per month.
Tax deductions, property appreciation, equity, increased net worth and cash flow.
They are doing a good job.