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Some finance bloggers talk about being a landlord as if it is very easy, but is it?

A lot of people are searching for ways to increase their income and many people find investing in rental real estate and being a landlord as a viable way of increasing wealth over the long term. The idea is simple and easy for most people to understand, so it’s natural that so many people are being a landlord now a days.

Real estate is what I enjoy to research. First I want to look at real estate in my nearby area, particularly a single family home. I live in a better suburb of Cincinnati, OH. The taxes are reasonable (slightly higher than other areas of Cincinnati, but overall fairly cheap).

Putting a Pencil to it First:

Single Family Home – Listed $69,900, Annual Taxes: $2251, Insurance $700
Assume a 20% down payment, lets say you buy the property for $65,000 after all fees and closing.

Owning Rental PropertyMortgage Payment: $349.33
Monthly Taxes: $187.58
Monthly Insurance: $58.33
Maintenance Cost: $50
Disaster Fund
($1000 a year / 12) = $83.33 – Roof, A/C, Furnace, Water Problems, Deductible, Etc.
Lets call these two items: $130

Total Cost: $725.24 a month
How much can you rent it for – This is a debate. Lets say you can get $950 for this home. It is in good condition, but not in the best place within the good suburb. Also I want to state this is the cheapest single family home within the area.

So now lets talk about what you get out of this:

Deduction: You can depreciate the value of the Structure, but not the land. Lets be favorable and say you can deduct $50,000 of the $65,000 over 27.5 years (what is current permitted). That is $1818 a year. We will come back to this.

You financed your home – $52,000 worth of financing in Fact. How much equity are you building with a standard 30-year mortgage at 4.25% with no additional payments:

Year 1 $877
Year 2 $914
Year 3 $955
Year 4 $995
Year 5 $1039

 


 

What about occupancy rate. Are you planning on having this rented 12 out of 12 months? Sure, but that’s not realistic. You make get a tenant that lives there 30 years straight, but more likely than not you should plan at least 5-11% vacancy. Lets call it 1 month a year (8.3% vacancy). Note: Rehab and Repairs can increase this greatly.

11
I shop on eBay and I am always searching for any way to save money on eBay purchases. To me eBay has always been a numbers game. eBay introduced a program a while back called “Ebay Bucks” and my epic mission to game the system began.

It works like this, you bid and win an auction. After paying for the item, eBay credits your eBay account with 2% back in “eBay Bucks.” These eBay bucks are given to you in quarterly certificates. Oh how delightful, especially for those who have made buying on ebay a business.

I myself frequently buy and resell items I buy on ebay for profit. How do I sell them? Well that’s for another article, but for now you should know that I was buying up to $7,000 a month in “inventory” off ebay.

So lets do the numbers, $7000 * 2% = $140 a month.


Bigcrumbs.com


Bigcrumbs.com used to be another program to get back 36% of the sellers fees as a buyer. Lets call this a conservative 2% cashback for ebay.  That’s another $140 right? Well it used to be. However Ebay canned the program in mid 2011 and started exploring their own options.

I mean think about it. Bigcrumbs and all of the other programs were just acting as a funnel for already current ebay buyers to get back another 2% while they took a piece. Ebay was right to make this move, although I would have loved to see Bigcrumbs stay active for ebay. Bigcrumbs is still active for many good stores like HP, Kmart.com, Jcpenney.com, Nordstroms, and Sears for example. If you are buying something online – This is FREE MONEY.

So why am I mentioning this? Well when the program with Bigcrumbs ended ebay said they were exploring their own options right? Well they have had several promotions, but this month – its pretty Epic.

7% BACK through Ebay bucks.

First off you need to subscribe to ebay bucks.  Basically you log in your ebay account and click subscribe. Boom, Free money. One note I learned though, you cannot snipe auctions (bid within last few minutes) – For all the details check out the FAQ.

http://ebaybucks.ebay.com/ (signup)

http://pages.ebay.com/rewards/faq.html (FAQ)

I did say 7% right? Well get this. If during checkout of an item you purchase you select “Pay Later through Paypal” you get an additional 5% until the end of October. That is 7%. Wait a second, You said 10%! All these numbers are confusing!

Well here is the additional 3%+. First off, the obvious one. Credit Card. 2% cashback. There are several ways to get 2% which I will cover in a later article, but for now lets assume you have a 2% cashback card. That’s 9%. Note you can simply pay off the Pay Later virtually immediately (have to wait for the balance to show up). Be sure to remember though.

Now for final percentage. Gas Perks. Many people overlook this perk. I myself shop at Kroger (as many do), but there are many Programs. Kroger, Giant Eagle, Biggs, and plenty of local deals. Go to the grocery store and buy gift-cards.

One little secret here. Most credit cards that give back 2% for gas and grocery and only 1% for other purchases will classify these cards as groceries and give you the 2%. Kroger is NOT the best program in the nation – it is actually pretty terrible, but I get .20 per gallon for $50 of giftcards. If you fill up 12 gallons at a time that is $1.20 off for $50 purchased (2.4%) back.

9% + 2.4% = 11.4% or more if you have a bigger tank. If you are a shopper at giant eagle, it would be double the perks – and would be 13.8% cashback.


There are some details you need to know.

First, you can only use $5000 worth of ebay giftcards per account per 6 month period.

IMG_2530

Gas Programs vary a lot, Kroger’s is actually VERY restrictive. They only let me get up to $1.00 off per fill up. ”

You need to have at least .01 that is put on the paypal pay it later. You cannot use giftcards completely. Therefore if your bill is $107.15 you need to use $100 of giftcards and put $7.15 on the pay it later.

 


I made a personal purchase that I will also share with you.

 

I bought a rebel t2i, body only for $464.99. Used Priced on Amazon – $516.99($509 +7.99 shipping.)

$464.99 – $31.64 (7% of the price minus shipping) – $9.29 (2% cashback on credit card) – $13.50 (450/$50 gift cards = .90 per gallon off x 15 gallons)

$464.99 –$54.43 = $410.56 — $106.43 off vs. best amazon price.

I know what you are thinking, that’s a big ticket item so it looks very dramatic. You are right, but you know what would look even more dramatic? $5000 gift cards in a single transaction.. say a used car, real estate, or other high priced item.

t2i_lifestyle_dual

 

t2i

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