Investment property

[SMEGMA STENCH]

Sent out a PM or two to people around here that looked like (or rather talked like) they might know a thing or two. But they seemed to all have their own spin on it. The way they do things. I guess the way I want to do it, is best described as being a professional landlord. A long time family friend is an elderly gentleman who owns some 226 rental properties. Needless to say the man is loaded. But he started with just one house.

He rents out all these houses to people, and just lets the money roll into his bank account every day. Of course there is a hell of a lot more to it than that, but that's the jist of it. Its a business for him now, that he runs. I was hoping that I could run into someone around here, who has at least some experience with this type of property investment. Now granted, this is really more of a retirement type of thing, but I already control 2 properties with which I could start. And will soon own a third.

So I guess my ignorance on the subject lies, in that I'm not sure how exactly you can make a profit doing this after all those pesky expenses. You've got the yearly land taxes, the insurance, the repair bill, etc. After everything, is there really enough left to justify investing in this manner?

[TexasT]

Well if you make $50/mo on one and have 226 you can do the math. Pretty tidy sum per month. It is work just like a real job.

[Vertnut]

The way I've approached it is more of a retirement fund. The houses are set up on 15 year financing. The rent covers the payment and management fee's. I have no desire to "maintain" them myself. I have subs in the event something breaks, etc., but I don't personally collect the rent. As the houses get paid off, that rent money goes right into your pocket. There's also the option of selling some of the houses when/if the market takes off. I'm betting your older friend has paid off many of those houses, and does extremely well.
Remember that "investment properties" usually require 20% down.

[talisman]

Thought you were leaving?

[03mustangdude]

Know a couple of people like that as well but they dont suggest you use a management agency till your third house from what ive been told.

['90Vert]

You have to buy the house right (cheap) to make cash flow from the very beginning. As a generic rule low end housing cash flows better but the tenants are more of a pita. Nicer homes have the potential for a higher class of tenant but also less cash flow for rent.

For lots of management ideas visit www.mrlandlord.com.

[War Machine]

trap house, chooochooo!!!!

[GeorgeG.]

If the going rental rates in the area do not support paying the mortgage, insurance, taxes and hopefully a leaving a little after, you're not buying cheap enough.

Also, it's a good idea to have at least several thousand in savings for the major repairs and at least two months worth of savings to cover the problem tenants when they don't pay. IIRC, a tenant can be evicted in 30 days in DFW, but it's not uncommon for them to get 2-3 months worth of free rent if they know how to work the system.

The problem I couldn't overcome was establishing a "company" so that I didn't have to use my own SSN to buy invenstment property. I had 3 mortgages at one time several years ago and it was a PITA if I wanted to buy a vehicle or anything requiring credit.

[SMEGMA STENCH]

Remember that "investment properties" usually require 20% down.

Please elaborate. Hadn't considered this. Are you talking about the standard downpayment on any property?

[racrguy]

Please elaborate. Hadn't considered this. Are you talking about the standard downpayment on any property?

No, houses you don't plan on living in are subject to higher requirements by the lenders.

[Trip McNeely]

Have fun being a slum lord.

[SMEGMA STENCH]

Have fun being a slum lord.

Whatever pays the bills.

[jakesford]

Also know that borrowing on a rental property is a little different a mortgage on a primary residence. I had looked into some potential options with buying a duplex with existing tenants. Having a property that is "cash flowing" from the start can help with securing financing ect. Also realize that rental losses may not be deductible for tax purposes, but there are numerous variables here.

[dcs13]

No, houses you don't plan on living in are subject to higher requirements by the lenders.

Last one I bought was 25% down...

Now is a good time to get in if your money is right. Mortgage rates are so damn low....Short sales can be good investments if you have the cash to fix it up after the dead beats trash it.

[YALE]

Last one I bought was 25% down...

Now is a good time to get in if your money is right. Mortgage rates are so damn low....Short sales can be good investments if you have the cash to fix it up after the dead beats trash it.

Dan Bishop doesn't have any money. He's just trailer park dreamin'.