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Started By
Message
Need advice on buying a rental house
Posted on 2/16/17 at 8:24 am
Posted on 2/16/17 at 8:24 am
(no message)
This post was edited on 11/28/17 at 10:07 pm
Posted on 2/16/17 at 8:37 am to MLSter
quote:
Need advice on buying a rental house by MLSter
quote:
Since I would be a first time homebuyer
I can't speak on being a landlord, but you've never owned your own house before?
I would consider doing that first. I bought my first house a year ago and I've already learned so much more than I ever knew about house maintenance and repairs, and all the work that goes into it. Maybe you come from a background where you're more familiar with what it would take to be a landlord, though. Otherwise, you might not really know what you're getting yourself into.
Posted on 2/16/17 at 9:05 am to MLSter
quote:
rent it to my sister and her friend
Terrible idea.
As far as buying your first rental, I would buy the house for you to live in so you can take advantage of these low rates on 30 year loans.
THEN, your life circumstances can change and you can turn it into a rental...
Posted on 2/16/17 at 9:15 am to MLSter
quote:
I have no clue what im getting into
Then don't do it.
I didn't read the rest of your post, but it's always good advice to not get involved in something you have no clue about.
Posted on 2/16/17 at 9:19 am to MLSter
You need to do a lot and I mean a LOT of reading on this website( Biggerpockets.com ). Attend some webinars and listen to podcast. I have been plotting on rentals for a year learning strategies and ways to make the business work with the least amount of input from me. It is a great website and you can search all kinds of topics.
Posted on 2/16/17 at 9:29 am to MLSter
Ok....
First off, what is your main goal? Are you trying to have an asset in your name, gain cash flow, build equity, help out your sister and her hot friends, fund a future primary residence, etc? You're kind of all over the place.
A few things,
Regardless if this is your first home, you can get an FHA loan. What that means, is you can put down 3.5% and the bank will fund the rest. You'll accrue PMI for the life of the loan, but that's ok. Plenty of people take out FHA loans (I have one on a house myself). You can refinance later into a conventional if you have to. You'll want to check with your local state laws though.
Now when you take out an FHA loan on a house, it's for a primary residence. In other words, I can't put down 3.5% on a house and immediately move tenants in and collect rent. You have to live in the house for at least 12 months. Again, check with YOUR local laws. Now fortunately you have a way to "beat the system" because you can have your sister move in, and have her give you cash. You'll have to tell the bank, and the lender that you're moving into it though. If she cuts you checks, they'll want to know where that $ is coming from and why. I don't know what the hell the "garden district" is, but if it isn't near you, the bank will want to know how you plan on working (assuming you have a job and a w2), and living in the house at the same time. In other words, you can't live and work in Alabama, and buy this house in Florida.
Another thing to keep in mind, the less you put down on a house in the form of a down payment, the HIGHER your mortgage will be. Your other options are a conventional loan (Lowest is 5%). If I were you and your father was cool with it, i'd use that money. Put down as much as you can. The lower your mortgage, the more $ you'll get each month from your tenants paying YOU rent.
Real Estate is a cool thing man. Appreciation, Depreciation, Cash Flow, Debt Paydown, and Inflation.
What you need to do is find a small multifamily (duplex), and put down 20%. Think about it...your mortgage could be $1000/month, but you could rent out each unit for $1000/month. You'd cash flow $1000 extra per month. Wait a couple years, and increase rent a $100 bucks. Now you're clearing $1200 cash a month. All while your tenants are paying off your debt, and your property is (hopefully) appreciating. If it appreciates 10k, you can refinance and pull out the cash and buy another property or sit on it.
First off, what is your main goal? Are you trying to have an asset in your name, gain cash flow, build equity, help out your sister and her hot friends, fund a future primary residence, etc? You're kind of all over the place.
A few things,
Regardless if this is your first home, you can get an FHA loan. What that means, is you can put down 3.5% and the bank will fund the rest. You'll accrue PMI for the life of the loan, but that's ok. Plenty of people take out FHA loans (I have one on a house myself). You can refinance later into a conventional if you have to. You'll want to check with your local state laws though.
Now when you take out an FHA loan on a house, it's for a primary residence. In other words, I can't put down 3.5% on a house and immediately move tenants in and collect rent. You have to live in the house for at least 12 months. Again, check with YOUR local laws. Now fortunately you have a way to "beat the system" because you can have your sister move in, and have her give you cash. You'll have to tell the bank, and the lender that you're moving into it though. If she cuts you checks, they'll want to know where that $ is coming from and why. I don't know what the hell the "garden district" is, but if it isn't near you, the bank will want to know how you plan on working (assuming you have a job and a w2), and living in the house at the same time. In other words, you can't live and work in Alabama, and buy this house in Florida.
Another thing to keep in mind, the less you put down on a house in the form of a down payment, the HIGHER your mortgage will be. Your other options are a conventional loan (Lowest is 5%). If I were you and your father was cool with it, i'd use that money. Put down as much as you can. The lower your mortgage, the more $ you'll get each month from your tenants paying YOU rent.
Real Estate is a cool thing man. Appreciation, Depreciation, Cash Flow, Debt Paydown, and Inflation.
What you need to do is find a small multifamily (duplex), and put down 20%. Think about it...your mortgage could be $1000/month, but you could rent out each unit for $1000/month. You'd cash flow $1000 extra per month. Wait a couple years, and increase rent a $100 bucks. Now you're clearing $1200 cash a month. All while your tenants are paying off your debt, and your property is (hopefully) appreciating. If it appreciates 10k, you can refinance and pull out the cash and buy another property or sit on it.
Posted on 2/16/17 at 9:39 am to MLSter
quote:
I want to buy a house in the garden district or southdowns areas
You will be paying a premium in those areas. I wouldn't even consider paying $200+/sqft for a house in Baton Rouge that I may or may not ever live in.
Posted on 2/16/17 at 11:42 am to MLSter
Biggerpockets.com
You're welcome
You're welcome
This post was edited on 2/17/17 at 12:21 pm
Posted on 2/16/17 at 2:50 pm to MLSter
quote:
to my sister and her friend
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