re: Real estate or stock market?

Does purchasing a non-distressed property ever make sense as a rental?

Let's say you purchase a 2 bed/2 BA condo for $170,000 that you can rent in the market for $1300 a month. After 20% down you are looking at a mortgage of $640 a month, and maybe fees bring that to $900 a month.

More plays into the decision of course, but is that type of margin worth it? Does it change if you can put more down?

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but is that type of margin worth it?

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Nope.

Vacancy
Repairs
Cap Ex
Condo Fees
Management Expense

NOI can fluctuate so much in residential real estate I don't usually bother with cap rates.

There are a million different strategies that are successful so please don't think my way is the only way.

I'm looking to get at least 2% per month of my "all in" price (purchase plus repairs). It's pretty much impossible to do on higher end properties but I can do 2% - 3% all day on sub 50k stuff. On higher end properties with appreciation potential, I would think about 1% but never below it.

Also, I'm looking for the house to pay itself off in 5 years or less. 3 is my goal but that number is very hard to hit. I'm usually at 4- 5 years.

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I've always thought the philosophy was to put down as little as possible so you never actually "put any money" into the investment and start gaining scot free 15-20 years down the road

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you can start out like that if you are very good at doing creative deals especially from FSBO's especially if you can get owner financed properties. Most do not want to screw with that, they want to dump it. More money down =more cash flow. once you own more than 4 properties fannie mae makes you put down 25% along with many other tight lending restrictions. I'll be putting down more than that on my next deal so i can hit a certain milestone in my cashflow.

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I gotcha. I have no clue and honestly am not even close to a position to be able to invest in hard RE

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Fannie mae will give you 10 conventional loans IF you meet all their criteria as an investor. After that you can use private lending(usually very high down payments), or go for owner financing(you can possibly get a no money down deal although hard to do), or just do cash buys. or as you pay off you conventional loans then you can get more, up to a maximum of ten.

Start with biggerpockets.com

Depends on your strategy. There are ways to invest with no money out of pocket but to do that you will need to partner up with people that have money. If the deal is good enough then money will find you.

Www.biggerpockets. Com

go cray

Many people use a strategy of using very little, or none, of their own capital while investing in real estate. Essentially properties are bought with as little down as possible with the intention that the cash flow from renting will cover the mortgage and all expenses of the property. Using this method basically allows someone to build wealth by having excess cash flow without ever really having the initial capital in the first place.

For example, one can take of up to 10 or so loans from Fannie. If each of these loans is able to generate $300-400 per month of excess cash flow, you now have $3000-4000 coming in each month without having to wait until you have enough cash to buy each property outright.

Buying outright means that you have tied up your money into the property and cant really do much else with it. However, it also means you have more cash coming back from the property.