Some fairly easy math that you can learn will  help you instantly determine whether or not a home will be a profitable rental property and provide you with positive cash flow as an investment.

Homes will generally rent for somewhere between 1.0% and 1.3% of their price. That means that a home you pay $100,000 for should rent for between $1,000 and $1,300 per month. Now, in order to be cash flow positive, you need to be fairly certain that your monthly costs of owning the property are going to be a fair margin less than the rent.

Your monthly costs include:

1. The mortgage payment

2. Home Owner's Association dues

3. Property tax

4. Property insurance

5. Sewer and trash

6. Maintenance and repairs

You can often write numbers 5 and 6 into the lease so that the tenant pays for all or most of them, but you need to know them in any case so that your calculation is safe and correct.

The largest portion of your expense will almost surely be the mortgage payment. As a general rule you will need to secure a loan with an annual interest rate of less than 8% of you plan to borrow the full amount of the purchase price. If you can pay a larger down payment, then a higher interest rate is bearable.

To make an otherwise bad deal work, then you need to get creative.

Think about some of these techniques:

1. Asking the seller to help with some of the price by carrying back a loan, where you agree to pay an interest rate of 6% on $20,000, and get a loan for the rest. A seller who does not need all of the money at the time of sale may go for it.

2. Take over an existing loan from a seller who needs to get out from under the payments

3. Work some of the property tax costs or HOA dues into the deal when you buy the home by having the seller agree to pay for them. Complaining about a HomeOwner's Association is like nails on a chalkboard to a seller. They may agree to pay your first two years up front when you buy.

4. Add incentives for the tenant to increase the monthly rent like, no credit check, month to month or fixed agreements, help with move in, or free appliances.

Being creative in this real estate market will set the winners apart from the losers. There are tremendous opportunities for smart investors to turn one person’s problem into a win/ win situation. The most successful people in the country are problem solvers, and in today’s market there are plenty of problems to solve.

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