Question

Buying real estate to rent is an option that has higher risk than some other investments. However, the returns can be good. Assume you have purchased a single-family home that you intend to rent. The house will rent for $750\$750 per month. You will have the following expenses:

  • Monthly mortgage \,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\, $390\$390
  • Monthly insurance \,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\, $60\$60
  • Taxes every 6 months \,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\, $340\$340
  • Repairs (yearly estimate) \,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\, $500\$500
  • Monthly lawn care or snow removal \,\,\,\,\,\,\,\,\, $100\$100

Calculate the total rent you will receive in a year. Assume the house is rented for the full 12 months per year.