On this podcast episode I talk about rental property returns and the components that make up the rental income and the rental expenses. As an example, I use a typical 3 bedroom 2 bathroom house that could be purchased for $250,000 in Port St Lucie FL. This house could be rented for $1,800 which would represent an annual gross rental income of $21,600. I break down the expenses on a property like this to show you how the rental income and expenses would be broken out in order to arrive at your net rental income (which is your real return). Gross Annual Income $21,600 Property Taxes $4,000 Property Insurance $3,000 Repairs & Maintenance $1,800 Vacancies and Evictions $1,800 Property Management $2,160 Net Rental Income $8,840. If you were to purchase this property for the price of $250,000 and you paid cash, then your return of $8,840 on a $250,000 would return you only 3.5% on your cash. Now granted that’s better than a CD in the bank, but it’s still a low return. So why invest in real estate? The answers are: 1. Appreciation 2. Tax Deductions 3. Leverage 4. Cash Flow 5. Creating Long Term Wealth and Ultimately, creating Financial Freedom. If you really want to leverage your returns and put your wealth creation on steroids, then you need to find properties at way below market prices. I use an example of a probate property on this podcast, but to find deals like this you need to be marketing to motivated sellers like people in foreclosure, vacant properties, tired landlords, inherited properties and probates (the example I use on this episode).