Real Estate Investing

It depends on your market, how long you plan to stay, and current mortgage rates. In most markets, buying is cheaper after 5-7 years of ownership. But renting wins in the short term (under 5 years) because of closing costs, maintenance, and the opportunity cost of a large down payment.

Property taxes (1-3% of home value/year), homeowner's insurance ($1,500-3,000/year), maintenance and repairs (1-2% of home value/year), HOA fees ($200-500/month), closing costs (2-5% of purchase price), and the opportunity cost of your down payment invested elsewhere.

A "good" cap rate is typically 5-10%, depending on the market. In high-cost areas (NYC, SF), 3-5% is common. In affordable markets (Midwest, South), 8-12% is achievable. Higher cap rate = higher return but often higher risk or less appreciation.

Monthly rent minus: mortgage payment (PITI), property management (8-12% of rent), maintenance reserve (5-10%), vacancy allowance (5-8%), insurance, property taxes, and HOA fees. Positive cash flow means the property pays you every month. Most investors target $200-500/month minimum.

According to ATTOM Data, the average gross profit on a house flip in 2025 was about $70,000. But after holding costs, renovation overruns, and selling fees, net profit is typically $30,000-$50,000 per flip — or about 10-20% ROI on invested capital.

Holding costs: mortgage payments during renovation ($2,000-5,000/mo), utilities, insurance, property taxes. Renovation overruns (budget 20% extra). Selling costs: agent commissions (5-6%), closing costs (1-2%), and carrying costs if the property sits unsold.