I read that people make money buying rental homes…like one or two a year. How can you buy more homes if you'll end up in a debt to income ratio problem?
You CAN or should be able to do it! THE primary challenge is getting past the first two properties AND getting the right tenants in your property to carry the load of paying ALL your mortgage, taxes AND expenses at each property AND providing a profit for you.
I suggest you start with a three-unit [triplex] or four-unit [quadplex] apartment building. It is VERY STRONGLY suggested each apartment have its own meter for electric, water and heat.
Single-family homes, condos and duplexes are simply not very cost efficient.
DON'T take the responsibility of renting out any aopartment or finding any tenants. Let a professional real estate agent do it. Yes, it costs money, but believe me, its worth the investment.
Here are some other bits of advice:
1] Get pre-qualified at a bank or Savings and Loan. Mortgage Service companies usually tend to have higher fees.
2] Find a very active real estate agent in the areas you are interested in investing in AND stay with that agent! He/She should be able to show you just about any property you are interested in seeing.
3] Become VERY familiar with the sales contract/agreement of sale/Sell-buy contract or whatever else the buying contract is called.
4] Hire a home inspector - a member of ASHI - to look over the property AND make the sale contingent upon the inspector's report.
5] Get title insurance for the property! AND the accompanying endorsements!
6] Review and understand the mortgage docs. I suggest getting a fixed rate, open end, no pre-payment penalty mortgage.
7] Read and understand the lease. Don't be afraid to put your own applicable rules in that lease. The agent usually KNOWS or SHOULD KNOW what clauses to put in your lease to protect you.
8] Join a real estate investment group!
Thanks for asking your Q! I enjoyed taking the time to answer it!
VTY,
Ron Berue
Yes, that is my real last name!
October 8th, 2007 at 9:51 pm
Dont believe everything you read!!!
Especially in todays market its becoming more and more difficult because you have to put alot more down to buy rental homes due to the subprime mess..
References :
October 8th, 2007 at 10:18 pm
Well first off I think its a great time to Buy Rental Properties.. There are a lot fo foreclosures and this means a lot of home owners who can't get loans and need to Rent a house…. The thing you need to be careful about is if you think the market is going to turn in only 2 years.. If not you will need to have an exit strategy if you can't keep up…
As far as Debt to income ratio why not try to get an investor to help you… Look for hard Cash and you can back the money with a 2nd deed on the house and give them a certain amount of the rental income…..
CHEERS
References :
Real Estate Investor
October 8th, 2007 at 10:35 pm
You CAN or should be able to do it! THE primary challenge is getting past the first two properties AND getting the right tenants in your property to carry the load of paying ALL your mortgage, taxes AND expenses at each property AND providing a profit for you.
I suggest you start with a three-unit [triplex] or four-unit [quadplex] apartment building. It is VERY STRONGLY suggested each apartment have its own meter for electric, water and heat.
Single-family homes, condos and duplexes are simply not very cost efficient.
DON'T take the responsibility of renting out any aopartment or finding any tenants. Let a professional real estate agent do it. Yes, it costs money, but believe me, its worth the investment.
Here are some other bits of advice:
1] Get pre-qualified at a bank or Savings and Loan. Mortgage Service companies usually tend to have higher fees.
2] Find a very active real estate agent in the areas you are interested in investing in AND stay with that agent! He/She should be able to show you just about any property you are interested in seeing.
3] Become VERY familiar with the sales contract/agreement of sale/Sell-buy contract or whatever else the buying contract is called.
4] Hire a home inspector - a member of ASHI - to look over the property AND make the sale contingent upon the inspector's report.
5] Get title insurance for the property! AND the accompanying endorsements!
6] Review and understand the mortgage docs. I suggest getting a fixed rate, open end, no pre-payment penalty mortgage.
7] Read and understand the lease. Don't be afraid to put your own applicable rules in that lease. The agent usually KNOWS or SHOULD KNOW what clauses to put in your lease to protect you.
8] Join a real estate investment group!
Thanks for asking your Q! I enjoyed taking the time to answer it!
VTY,
Ron Berue
Yes, that is my real last name!
References :
My wonderful family.
In the real estate business over 33 years in PA.
Been there! AND done that - many, many times!
"THE University of Hard Knocks"
October 9th, 2007 at 12:31 am
You don't run into a debt to income ratio problem if your income keeps increasing enough. Look for the right deals in the right market(s) for you.
Example: I have a 4-plex in the midwest (small town because I'm not into dealing with ghettos) that I purchased 2 years ago for $60,000. The units in this 4-plex rent for a total of $1300 when it is fully rented. So my loan payment and taxes are under $600/mo. and I pay for gas, water, and trash which is a little more. So it more than pays for itself and doesn't count against me. Plus I have good credit, so people will put me in more debt than I could handle if I was willing to take it.
Places like mine are frequently on the market there (given that they may require some work, and the one I bought was turn-key and already had full long-term occupancy).
Examples (off the MLS right now): 4-1 bedroom units for $35,000…$1100/mo when fully rented (is now fully rented)
$49,900 - 4-1 bedroom units, no rental income mentioned, but probably similar to above
$52,500 - renters pay all utilites for 2-2 bedrooms…currently renting for $725/mo total (it's broken down to $300/mo and $425/mo…for 2 bedrooms there you can get $450/mo easily, especially if you are willing to take section 8).
$58,500- looks like some updates/newer roof, $800/mo rental income (one 2 bedroom and one 1 bedroom)
$69,500- 2-2 bedrooms tenents pay electric + $1025 total (I know he takes section 8 because I looked at that one a few years ago when it was listed for less — and both tenents were there to stay at the time [I needed a place for my property manager to live])
$70,000- 4-2 bedrooms
$89,000 (different town) 3-2 bedrooms $1075/mo income
Wrong markets would be major metropolitan areas outside the ghetto) esp. on the east or west coast because there is no way you can get your mortgaged covered with your rental income.
References :
I am a landlord.
October 9th, 2007 at 4:04 am
You simply invest into real estate company/buy residences here..are you here in Manila philippines? Maybe I can help coz i am Sales Manager of Century Properties in Manila..If you are intersted to invest here email me..mhel_242001@yahoo.com
References :