Does this make sense financially speaking

[daniel@procarpet]

I just made an offer on an investment property. The home is on a nice street in a decent area. I will have 50k invested in the home after repairs or 55k if I make it more posh. I can pay the home off in about three years and will have three homes paid for and collect rent on two of them. I figure I can get 800 per month in rent. My plan is to pay the home off then use the rent on the two rental homes to buy a lake house in a few years. Eventually I would collect rent on my current residence and move to the lake for good. Right now I am not certain I want to go into debt. For some reason it makes me want to work harder though. I always anticpate the worst. I fiugure worst case scenario is I rent the home for a few years and sell it for what I originally invested in the home and cash the equity out.

I'm getting burned out scrubbing rugs and want to sit back and relax and real estate is the only way I see myself doing that. I don't need a lot of monthly cash flow to live. Plus I have come to realize the stock market is no where near as good an investment as solid real estate.

My only problem with purchasing this home is what if I need to get another van or invest in more equipment and I have a problem with the tennants. My current vans have high mileage. What do you think or what would you do?

 

[Lee Stockwell]

I'd hate to be a landlord in Memphis.

 

[hogjowl]

Man, I am proud for you!

What I suggest is that you follow that plan and then sell your carpet cleaning business. Then talk Bridgepoint into making you their Steve Toburen.

Minus the BS's, I mean PS's.

 

[daniel@procarpet]

I don't want to act like I know what I am doing because I don't, but I have great tennants that are clean, quiet, and pay me like clock work. Basically I got lucky. You have to learn as you go. That is what I did as far as cleaning goes. Memphis isn't bad for the most part. I definitely am not trying to be a slum lord. I just want a couple nice homes.

 

[Ryan]

Buy it, pay it off, sell the house and owner finance it. My dad has been in real estate investment for years, I grew up in it. Rent houses are a PAIN. Owner financing is wonderful.

 

[Erik]

How long are you going to KICK BACK AND RELAX. If i was young and in your shoes I'd KEEP DOIN WHAT YOUR DOIN.





Take a vacation shiteatinggrin
How old are you :?:

 

[amazingcleansc]

I don't want to act like I know what I am doing because I don't, but I have great tennants that are clean, quiet, and pay me like clock work. Basically I got lucky. You have to learn as you go. That is what I did as far as cleaning goes. Memphis isn't bad for the most part. I definitely am not trying to be a slum lord. I just want a couple nice homes.

The more rentals you own, the less good quality tenants you get. Trust me on that one. If you get a few vacancies at once, you can almost hear the sucking sound of money flying out the door!

Memphis the last time i looked had some CRA-ZAY deals on giant apartment complex's like less than 8 grand a unit. I mean, the kind of areas that gave rise to the blues if you know what i mean! but damn the money looked nice.

What is YOUR payment on the house vs the rent?

 

[joeynbgky]

Daniel, I own about 18 units myself. I also have a property management company. I manage a total of 435 units for various owners. ( I have a property manager and leasing agents) You are doing right. This is what I would do for the house........... Offer owner financing, Do the credit check fill out the paperwork...... put in there they have to finance through you for 5 years before they can get a traditional mortgage. Set the sales price high in the contract. Heres the fun part........ Collect about $5,000 for a down payment. (poor people will come up with this) Then if your lucky 1 year from now, they wont be able to pay... Oh man sucks to be them.. So you got your high Rent payments and there 5 grand. So now you get to do it all again, over and over again. owner financing.

 

[kmdineen]

Daniel, I own about 18 units myself. I also have a property management company. I manage a total of 435 units for various owners. ( I have a property manager and leasing agents) You are doing right. This is what I would do for the house........... Offer owner financing, Do the credit check fill out the paperwork...... put in there they have to finance through you for 5 years before they can get a traditional mortgage. Set the sales price high in the contract. Heres the fun part........ Collect about $5,000 for a down payment. (poor people will come up with this) Then if your lucky 1 year from now, they wont be able to pay... Oh man sucks to be them.. So you got your high Rent payments and there 5 grand. So now you get to do it all again, over and over again. owner financing.

You are an asshole, sucks to be YOU

 

[joeynbgky]

I know its mean. It happens alot though. I always work with people on payments. But its a business. The banks are nto giving out mortgages, so take advantage of it. If the person has good intentions and makes there payments and ends up buying the house, its a win for you and them. Theres negatives and positives to both.

 

[daniel@procarpet]

I don't want to act like I know what I am doing because I don't, but I have great tennants that are clean, quiet, and pay me like clock work. Basically I got lucky. You have to learn as you go. That is what I did as far as cleaning goes. Memphis isn't bad for the most part. I definitely am not trying to be a slum lord. I just want a couple nice homes.

The more rentals you own, the less good quality tenants you get. Trust me on that one. If you get a few vacancies at once, you can almost hear the sucking sound of money flying out the door!

Memphis the last time i looked had some CRA-ZAY deals on giant apartment complex's like less than 8 grand a unit. I mean, the kind of areas that gave rise to the blues if you know what i mean! but damn the money looked nice.

What is YOUR payment on the house vs the rent?

Actually Memphis is incredible if you go to the nicer areas with 500k average home value. The payment, insurance, and taxes on a 15 year loan would be about 600. If I apply the rent from this house plus my other house along with money from cleaning, I should be able to pay the home off fast. Then that 800 per month will be mostly profit when I deduct depreciation and other write offs. I am sure rents will go up over time as well, but 800 per month for 20 years is 192k. Invest that in a diversified retirement vehicle and I should be looking great at 47.

David I deal with property investors all the time and some people just don’t get it imo. They are doing a lot work for a low return. Some guys have thirty year mortgages on houses that need major repairs to make 150-200 dollars per month. Sorry that is not for me. I would rather pay 150k for a nice home that I can break even on the mortgage in a nicer area, attract good tenants, and then sell the home years later at a higher price and have real equity.

My friend owns some rentals and buys them dirt cheap, but he has all kinds of problems with the
people that rent them. He evicts people all the time.

 

[Ryan]

Daniel, I own about 18 units myself. I also have a property management company. I manage a total of 435 units for various owners. ( I have a property manager and leasing agents) You are doing right. This is what I would do for the house........... Offer owner financing, Do the credit check fill out the paperwork...... put in there they have to finance through you for 5 years before they can get a traditional mortgage. Set the sales price high in the contract. Heres the fun part........ Collect about $5,000 for a down payment. (poor people will come up with this) Then if your lucky 1 year from now, they wont be able to pay... Oh man sucks to be them.. So you got your high Rent payments and there 5 grand. So now you get to do it all again, over and over again. owner financing.

Ok so I wasn't going to say it like that, but that was exactly what was going through my head. I know a guy who repossessed a house 5 times and made something like 450k off a house he sold for 75k. (this was in the 80's-90's)

 

[joeynbgky]

Good money in it. I mean if the person cant afford it, then they shouldnt have gotten the house. I mean if they skip out it doesnt go on there credit and they can just walk away. So its not mean really

 

[Walrus Gumboot]

I know its mean. It happens alot though. I always work with people on payments. But its a business. The banks are nto giving out mortgages, so take advantage of it. If the person has good intentions and makes there payments and ends up buying the house, its a win for you and them. Theres negatives and positives to both.

I would say one of the negatives would be that it is illegal to do wraparound mortgages like the ones you're describing.
I have been investing in Real Estate since I was 26 years old(24 years).
I've made alot of money and I've spent alot of money.


We never had problems with renters until recently. Now we see alot of situations where both adults have lost their incomes and have to decide between rent or food. Guess which one they always choose.
When you have multiple properties vacant,things start to be less fun.

 

[joeynbgky]

Its legal says the attorney.. here anyways

 

[Steve in Omaha]

http://pragcap.com/invest-in-bulldozers+

Just don't expect any price appreciation any time soon.

Be careful out there...CASH is still king

 

[Jim Williams]

I highly recommend doing real estate investing debt free. Using the leverage method can burn you. If you are sure you want to do it, just be sure you are making enough cleaning carpets to pay the mortgage when the rental is empty. Remember, when you go to sell it, it may be empty for a year or so while you have it on the market.

It can be a great investment but just don't forget the risk. Believe me, I am still catching up last years mortgages on my 2 rentals.

 

[Steve in Omaha]

http://www.economist.com/blogs/freeexchange/2010/05/housing_markets_1