I own about 240 single family rentals in Memphis. I will be straight about it: this is not passive income. I manage the houses, I deal with tenants, and I deal with rehabs. What makes it work for me is the refinance math, not the idea that the money just shows up.

I only buy one kind of house. I buy under $100,000, 3 bedrooms or more, and I look for an after repair value between $180,000 and $265,000. Section 8 rents on those houses run $1,395 to $1,950 a month for 3 bedrooms and up.

After the rehab, I refinance with a DSCR loan at 70 to 80% of the after repair value. A DSCR loan looks at the rent against the mortgage payment, not my pay stubs. So the math looks like this:

ARV $180,000: 70% is $126,000, 80% is $144,000

ARV $200,000: 70% is $140,000, 80% is $160,000

ARV $265,000: 70% is $185,500, 80% is $212,000

That range is the whole deal for me. The rent has to cover the mortgage, tax, insurance, vacancy, and maintenance.…