- 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
Buying a rental before buying a house
Posted on 7/13/17 at 9:58 pm
Posted on 7/13/17 at 9:58 pm
Does it ever make sense to invest in a rental property before buying a house?
Im living in the SF Bay Area, and housing/rent prices are soaring through the roof. We are currently renting, and I'm concerned about having too much risk associated with the tech industry with my job, stock compensation, and potentially a house. I would like to stay mobile as well.
Am I crazy for considering purchasing a rental property before a primary residence? I would consider a location for the rental outside of California. I have a large sum of cash in a stock account at the moment, and I would like begin diversifying my investments.
I've been told I'm crazy for even considering it..
Im living in the SF Bay Area, and housing/rent prices are soaring through the roof. We are currently renting, and I'm concerned about having too much risk associated with the tech industry with my job, stock compensation, and potentially a house. I would like to stay mobile as well.
Am I crazy for considering purchasing a rental property before a primary residence? I would consider a location for the rental outside of California. I have a large sum of cash in a stock account at the moment, and I would like begin diversifying my investments.
I've been told I'm crazy for even considering it..
6
Posted on 7/13/17 at 10:29 pm to LSUTOM07
Every situation is unique. It may be smart or it may be dumb depending on the math.
Posted on 7/13/17 at 10:32 pm to LSUTOM07
A friend there bought a $700k house that has 4 bedrooms. He rents out each room for like $2000 a month, and lives in one room.
The value now is about doubled or more after 4 years and he is sitting pretty, but he will stay in the city.
The value now is about doubled or more after 4 years and he is sitting pretty, but he will stay in the city.
Posted on 7/13/17 at 10:33 pm to LSUTOM07
I would just keep investing in stocks. Living in SF, managing a cheap rental hours away sounds like a pain in the arse. Or just buy something, so you can "lock in" your housing costs (sans property tax increase/maintenance).
Posted on 7/15/17 at 3:21 pm to LSUTOM07
A lot of times people miscalculate the returns of owning a home. Many homes do appreciate over time, but homeowners don't factor in the time, energy and money put back into the house.
The two homes that I have owned have been some of my best investments. I think wow I made $40,000 in just a few years of this house. But I wouldn't be surprised if that number was zero when I factored in all the repairs and maintenance, improvements and cleaning that I did.
The two homes that I have owned have been some of my best investments. I think wow I made $40,000 in just a few years of this house. But I wouldn't be surprised if that number was zero when I factored in all the repairs and maintenance, improvements and cleaning that I did.
Posted on 7/15/17 at 9:53 pm to Rust Cohle
I know real estate professionals in the real estate community in Chicago and Austin and no one owns their own home because they see it as a waste of money FWIW.
Posted on 7/15/17 at 10:18 pm to LSUTOM07
My first home was a 4 unit building. It was an extremely smart move, and I think that's true for most single persons.
I also agree with the post about owner occupied residences not always being the "investment" they're sold as.
I've gone through life spending as little as possible on both vehicles and primary residences. It's often said one's house is usually most people's largest expenditure. That is no where near true for me. Not even close. By at least 20X. But I was able to make larger purchases, businesses and investments, mostly because my primary housing expense has always been laughably low.
I also agree with the post about owner occupied residences not always being the "investment" they're sold as.
I've gone through life spending as little as possible on both vehicles and primary residences. It's often said one's house is usually most people's largest expenditure. That is no where near true for me. Not even close. By at least 20X. But I was able to make larger purchases, businesses and investments, mostly because my primary housing expense has always been laughably low.
Posted on 7/16/17 at 1:48 am to eng08
That rings incredibly false to me. whomthenfuxk would rent out a room for 2000 dollar room on a 700,000 house. I know people who rent out a ducking floor on a multi-million dollar house for 2000 and there's a place nearby that rents 4000 for a 2 bedroom for a 5-10,000,000 house.
Posted on 7/16/17 at 11:21 am to athenslife101
quote:
That rings incredibly false to me.
One bedroom apartments are starting at 2400. Rooms are going for up to 2k. But for how long.. idk
Posted on 7/16/17 at 2:41 pm to LSUTOM07
quote:
Does it ever make sense to invest in a rental property before buying a house?
Sure, there are cases when that makes sense financially. Buying a single family home as a rental *might* make sense. But as Iowa Golfer mentioned, you may find that purchasing a multi-unit (up to four units still qualifies for owner occupied financing) makes more sense, if you determine that you have the personality and fortitude to be a real estate investor. Home ownership isn't for everyone. And owning/managing real estate rentals (residential or commercial) certainly isn't for everyone.
The first property that I bought was a single family rental. I bought that while I was still renting. The next property that I bought was a duplex and I lived in one of the units for about a year (just to get the owner occupied financing). I think I bought one or two townhouses as investments before I bought the house that I actually called home for several years. But I had a game plan mapped out to acquire property and I was just working the plan. Just make sure that you have a plan going in.
Posted on 7/17/17 at 10:13 am to athenslife101
quote:
I know real estate professionals in the real estate community in Chicago and Austin and no one owns their own home because they see it as a waste of money FWIW.
Ha, yes I know some people like this too and the real reason they do it is because they finance everything as "owner occupied" and additionally need all the financing they can get because they are leveraged out the wazoo.
Who wants to live in a house forever they don't own and can do whatever they want to to it?
OP, there is nothing wrong with renting while you own a rental. But if you have never owned a house, I'd really caution you on buying a rental first. There's a ton that goes into owning a rental to make sure you actually make money. The first and foremost is that most rentals need to be purchased as almost "steals" in order to get a proper return. I'm talking half price of a normal retail purchase or less, at auction, foreclosure, or otherwise a fantastic deal. You usually need to be involved heavily in the real estate game in some fashion or know someone that is, in order to get a deal good enough to make sense. You don't want to just find a realtor in another state and have them help you to find something.
All I'm trying to warn you with, is purchase price is everything on real estate returns. It generally needs to be cheaper than you think it does.
Posted on 7/17/17 at 10:21 am to baldona
A multi family may be a solid start, I routinely see quad plexes for decent deals. I say decent and routinely because I see them a couple times a year and they are listed for something like $300k for a quad plex that each unit rents for $800, so that would be $3200/ month.
Multi families rarely appreciate like a single family, so you are really in it for the rent.
Additionally, at the time you want to sell it they are more difficult and their price is generally set at what another investor is willing to pay for it because you rarely sell them individually.
But for someone new to real estate investment, I would agree that finding a quad that you can cash flow and get most likely get a moderate return on 7-9% is likely. I don't think they are easy to find killer deals on them though.
Multi families rarely appreciate like a single family, so you are really in it for the rent.
Additionally, at the time you want to sell it they are more difficult and their price is generally set at what another investor is willing to pay for it because you rarely sell them individually.
But for someone new to real estate investment, I would agree that finding a quad that you can cash flow and get most likely get a moderate return on 7-9% is likely. I don't think they are easy to find killer deals on them though.
Posted on 7/17/17 at 10:21 am to athenslife101
It's San Francisco not Athens GA. It's insane, and yes it is absurd. I'm in Louisiana and every time it comes up in discussions with my friends there I tell them they are crazy.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News