- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Rental property question
Posted on 1/9/20 at 9:38 am
Posted on 1/9/20 at 9:38 am
TL/DR
I own a rent house in Houston. Worth in the $360-380 range. Owe about $210 on it. 3.75% interest rate.
Mortgage, taxes, ins., etc. come out to about $1700 a month. I have a property manager I pay 8% of the rent to. If all goes well and no repairs, I clear $400. But obviously, some months there are things that need to get fixed.
Question: $400 a month for a property at that price point doesn't seem worth it to me. I'm considering selling and investing the equity back into the market. Taxes really kill me in Harris County.
My only concern with this is the lack of diversification as most of my assets are already in the market.
My other options are to pay down my primary residence mortgage but that seems not so good since my rate is pretty low at 3.75%.
Or, I could try to find a cheaper rental property to invest in but this takes time and real estate knowledge which I lack. I'm only renting the current house because I used to live in it and moved.
What says the money board?
1. Keep renting it?
2. Sell and pay down current mortgage?
3. Sell and invest the $100K+ in the market
4. Sell and buy a new rental property(s) with a higher percentage profit. If this is the winner? Any tips?
If it helps, I have no debt other than the two houses and a pretty big investment portfolio.
I own a rent house in Houston. Worth in the $360-380 range. Owe about $210 on it. 3.75% interest rate.
Mortgage, taxes, ins., etc. come out to about $1700 a month. I have a property manager I pay 8% of the rent to. If all goes well and no repairs, I clear $400. But obviously, some months there are things that need to get fixed.
Question: $400 a month for a property at that price point doesn't seem worth it to me. I'm considering selling and investing the equity back into the market. Taxes really kill me in Harris County.
My only concern with this is the lack of diversification as most of my assets are already in the market.
My other options are to pay down my primary residence mortgage but that seems not so good since my rate is pretty low at 3.75%.
Or, I could try to find a cheaper rental property to invest in but this takes time and real estate knowledge which I lack. I'm only renting the current house because I used to live in it and moved.
What says the money board?
1. Keep renting it?
2. Sell and pay down current mortgage?
3. Sell and invest the $100K+ in the market
4. Sell and buy a new rental property(s) with a higher percentage profit. If this is the winner? Any tips?
If it helps, I have no debt other than the two houses and a pretty big investment portfolio.
This post was edited on 1/9/20 at 9:43 am
13
Posted on 1/9/20 at 10:11 am to ulsaint
Are you currently still living in Houston?
Posted on 1/9/20 at 10:57 am to ulsaint
So rent is approx 2100/month? Have you looked to see how that compares to the market? Can you raise the rent to make it more worth your while?
As far as the market, there are real property investment options available in the market, so you could just invest in those.
As far as the market, there are real property investment options available in the market, so you could just invest in those.
Posted on 1/9/20 at 11:03 am to ulsaint
quote:
4. Sell and buy a new rental property(s) with a higher percentage profit. If this is the winner? Any tips?
This would be my choice. I'm currently doing the same thing to add to my rentals. You can prob buy at least 2 4-plexes with the 100k. You have to buy right tho. Shoot for a minimum of $200 per door net profit per month.
A quick evaluation of a property is that the total rents need to be at least 1% of the purchase price. I try to stay around 1.4%
Visit Biggerpockets and listen to their podcasts. Their rental property calculator on the website is a life saver when it comes to analyzing properties.
Posted on 1/9/20 at 11:32 am to ulsaint
This is my uneducated opinion that I follow that has worked for me so far in my area.
I try to clear 500/mo
I try to keep rent max at 1200 because I feel that beyond that you can afford your own house so your stay with me will be short. I rather not have to deal with re renting every year or two.
I look for properties NOT in a flood zone so I am not forced to get flood ins if I don't want too.
Put at least 20% down so no PMI
I would not sell your rent house to pay down your current principle, your rate is really low. Only way id consider it is if it paid off your house completely freeing up your current monthly payment. But then you loose tax credits. Not sure how that all works out in the books...
I would not put all my $ in the market...IMO people will always need a place to live and I have read here and there that some of the younger generation rather just rent vs buy, so I like rentals. Grew up with my parents having them and a good friend grandfather building a empire.
IMO I would sell and find something closer to me that I could manage and pocket that 8% fee.
I try to clear 500/mo
I try to keep rent max at 1200 because I feel that beyond that you can afford your own house so your stay with me will be short. I rather not have to deal with re renting every year or two.
I look for properties NOT in a flood zone so I am not forced to get flood ins if I don't want too.
Put at least 20% down so no PMI
I would not sell your rent house to pay down your current principle, your rate is really low. Only way id consider it is if it paid off your house completely freeing up your current monthly payment. But then you loose tax credits. Not sure how that all works out in the books...
I would not put all my $ in the market...IMO people will always need a place to live and I have read here and there that some of the younger generation rather just rent vs buy, so I like rentals. Grew up with my parents having them and a good friend grandfather building a empire.
IMO I would sell and find something closer to me that I could manage and pocket that 8% fee.
Posted on 1/9/20 at 11:50 am to ulsaint
quote:
1. Keep renting it?
2. Sell and pay down current mortgage?
3. Sell and invest the $100K+ in the market
4. Sell and buy a new rental property(s) with a higher percentage profit. If this is the winner? Any tips?
I think the question comes does to how much to you want to be involved in real estate.
If you want physical property, cash flow, advantages of tax depreciation, etc. then sure selling the property(or exchanging) and getting a new rental property and adding on from there, may be the best option.
If you are just wanting to diversify your assets with holdings in the real estate markets, then REITs would be where you'd want to look.
Posted on 1/9/20 at 11:50 am to ulsaint
quote:Youre going to want to keep at least a hundred dollars every month aside for maintenance, capex, and vacancy.
If all goes well and no repairs, I clear $400. But obviously, some months there are things that need to get fixed.
Posted on 1/9/20 at 3:36 pm to ulsaint
I always consider 2 things:
-Cashflow - Obviously
-Debt Service - How much equity do I have after "X" amount of time?
I wouldn't be upset with that cashflow amount if it had good debt service.
What kind of loan term are you on?
-Cashflow - Obviously
-Debt Service - How much equity do I have after "X" amount of time?
I wouldn't be upset with that cashflow amount if it had good debt service.
What kind of loan term are you on?
Posted on 1/9/20 at 4:05 pm to ulsaint
30 years of others paying your note and you get a free property with someone else paying it.
It always makes sense to keep real estate.
It always makes sense to keep real estate.
Posted on 1/9/20 at 7:19 pm to ulsaint
that is not good RTV.
I have homes way cheaper than that making more PCF than that.
you need to educate yourself in RE. It was obvious this home was never acquired or bought right to be a rental based on your debt sevice, rent to value and PCF.
good luck
I have homes way cheaper than that making more PCF than that.
quote:
but this takes time and real estate knowledge which I lack.
you need to educate yourself in RE. It was obvious this home was never acquired or bought right to be a rental based on your debt sevice, rent to value and PCF.
good luck
Posted on 1/10/20 at 5:26 pm to ulsaint
Don’t forget to include the cost of selling it in your evaluations. Realtor fees and closing costs add up pretty quickly. At 6% on a $350K sell price you would pay a realtor $21,000 and then another $4,000 in title policy, home warranty, minor repairs, recording fees, etc. Sucks for it to cost about $25,000 to sell a home.
Posted on 1/11/20 at 9:05 pm to ulsaint
You could get a 100k heloc and buy 5, 100k properties. Or sell it for 150 profit and buy 7 properties.
Posted on 1/15/20 at 11:00 am to ulsaint
Your $400/m profit equates to a 3.2% annual div yield on the $~$150,000 equity.
I would sell and try to find something that pays more than 3.2% to invest in.
I would sell and try to find something that pays more than 3.2% to invest in.
Posted on 1/29/20 at 8:05 pm to ulsaint
Get local..close to you..if there is a net capital gain, 1031 and move on.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News