Making Money Owning Rental Property - Return on Investment

Afraid to Rent Your Home? Here's the Real Story.

Over the years, many homeowners have said, "I would never rent my home."  Why? The fear of a tenant damaging the property. Yes, we’ve all heard horror stories, and they spread fast because they’re sensational. But what about the success stories?

At Lake Havasu Property Management, we’ve never had a home destroyed by a tenant. While a few homes have required major repairs, these situations are extremely rare. The majority of our clients enjoy years of low-maintenance tenancy, strong rental income, and significant equity gains.

A Simple Wealth-Building Example:

Let’s look at a rough projection of how renting your home can grow your wealth:

Home Purchase Price            $450,000                    

Down Payment (20%)             $90,000                      Loan Balance                          $360,000                     

Mortgage (5%, 30-year)          $1,932 month × 12 = $23,184 

Property Taxes (Annual)        $1,800                       

Homeowners Insurance           $750                          Maintenance Allowance (Annual)  $1,000                       

Total Annual Expenses      $26,734                 

Rental Income & Fees**    

Rent Income ($2,000 month)   24,000     

Property Management Fee (10%) $2,400     

Net Annual Income        $21,600

Annual Shortfall**          $5,134

Now let’s project this over  5 years:

1. Mortgage payments covered by tenant, the Principal is reduced.

2. **Property appreciation at 5% annually, $573,348 value after 5 years.

Equity Gain. $123,348.

3. Net cash shortfall over 5 years $5,134 × 5 = -$25,670.

4. Paint and carpet refresh after 5 years: -$10,000 (estimated).

5. Total net gain: $123,348 - 25,670 - $10,000 = $87,678.

That’s an 11.4% annual return on your original $90,000 down payment, not including tax deductions, depreciation, and write-offs. Plus, you own a tangible, appreciating asset that provides ongoing income and stability.

The Bottom Line:

If you bought a home 5 years ago and rented it out, your return on cash investment could have soared.

This is a basic example of how investing in rental property will build wealth over time. Every scenario is unique, so it's essential to consult your accountant and attorney for personalized advice tailored to your specific situation. We’re not investment advisors.

Call us today:  (928) 854-210