Registered: 1317095367 Posts: 1
Reply with quote #1
I have $60,000 saved for retirement. I have studied renting and see this as the only use of my savings I can think of. I know the pitfalls of renting. Plan is to buy a couple of SFH with 25% down for long term hold using a property mngr. I have checked out thoroughly in Memphis. Can anyone critique this or maybe offer any alternatives?
Registered: 1316147915 Posts: 3
Reply with quote #2
I would like to take a shot in helping you, but please remember that I do not have the experience as some investors in theses forums. And would not follow anything I say with out legal and professional advise. (Disclaimer, Lol!)
Currently I am in the middle of another investment property and learned a few valuable lessons on rental investing and long term holds. ___________________________________________________________________ So, at 25% down on two locations and $60,000 in savings you are looking at the price range of about $123,000 - $130,000. I am including closing cost, inspection, initial investment cost, etc. I would not jump on two properties right off the back. Here a few hidden cost that you will learn as you become a landlord. - $30,000 Down. - $400 Home inspector. - $200 Maintenance deposit for your property manager. - $400 Professional cleaning, carpet, stoves, AC, etc - $200-$1000 Trash, paint, holes, molding, grass, etc. - $700-$1000 You will most likely pay your first mortgage payment out of pocket. - Washer, Dryer, Refrigerator $1400-$1,700 - Lock Replacement of all doors $150-$250 - 1 month electric and gas to prep house So you are looking at $35,000 on your first investment or more depending on the type of property you are renting. I use a property manager for my investments and these were true numbers in my case. I demand 1st class renters so I pay to keep my homes at a high Laval of readiness. And the do it yourself dedication is great, and it will save a little in the long run. But a good property manager will require a certified Lock Smith, Cleaning Company, AC Mechanic Etc. I also assume you are jumping in on the "Short Sale" market. Which is where your long term investment may pay substantial dividends in the future. That is where the Home Inspection, Termite Inspection, Closing Cost will jump out a little. In a traditional sale, you sometimes can get seller to cover most of it. But the bank is not welling to pay all of the extras and give you a $250,000 house for $120,000. Not going in as a "investor", Maybe as owner-occupant. What I would do is, take $50,000 of that $60,000 and drop it on one house. This will drop your interest rate, Mortgage payment, and increase your monthly return and appreciation of your property quicker. - Save $10,000 for repairs and the hidden cost. - 6 months later pull the positive out of home #1 and repeat the process. If you do not need the $10,000 then save it for the next house. You also so should think about what you consider a positive investment. Example: $1000 is what i get from my renter. $400 = Mortgage, Ins, Taxes $66 = HOA $100 = Property Manager $30= Trash ___________ $596 Positive = $404 I have to take off, will catch up with this post later..I hope any of this helps you. Someone with more experience will pick me a part and we will both learn some more. Remember seek professional advice from a lawyer, CPA, and Realtor. (probably the smartest thing I wrote, lol)
Registered: 1169270040 Posts: 3,748
Reply with quote #3
I don't agree with the costs.
- Put 20% Down to avoid PMI. - $400 Home inspector. (If you don't know what to look for, this is a good investment. After you've done this many times, you can skip this.) - $0 Maintenance deposit for your property manager. Give it to the PM after it is ready. I'm a PM and I don't take maintenance deposits. - $200 Professional cleaning of carpet. Have the carpet professionally cleaned. Do the rest yourself to save $$$. - $200 Trash, paint, holes, molding, grass, etc. Again, do as much as you can to save $$$. - $700 You may have to pay your first mortgage payment out of pocket. (But you may get 30 days before a payment is due. If your mortgage is more than $700/mo you probably won't be making any $$$.) - Stove & Refrigerator $400 Buy good used, not new. Let the tenant provide their own washer & dryer. - Lock Replacement of all doors $50 Buy the locks and replace them yourself. 4 screws per lock. Easy to do. - 2 months water/sewer/trash, electric, and gas to prep house (It'll take longer than you think.) Look for a good bargain in a house. Perhaps a bank repo. I could get a great one for $65k, $13k down, spend $8-15k to fix it up. Finance the repairs in a construction type mortgage loan (many names for these, ask for one). Payments under $350 (not counting insurance or taxes - another $200/mo.) Then when that one is up and rented, do it again, and again. You'll have 3 houses with payments of $1650/mo, rents of $2550 ($850/mo ea.) and a gain of $900/mo (not counting maintenance & vacancy). Put the rest of your retirement in an account that you can tap for emergencies, vacancies, etc. Whatever you do, don't fall in love with any house. These are investments. Look for the bargain in a good neighborhood (the worst house in the best area). Look for ones with terrible cosmetic issues (bad paint, old cabinets, dated fixtures.) These are easy fixes. You may want to think about a duplex. Twice the income from the same property.
Registered: 1321408072 Posts: 4
Reply with quote #4
This is two months after your post, so you may have already made your decisions.
You didn't put your location in your profile so if you don't live in the city where you are looking to buy, better think again. I agree with only one property at a time. Buy one and try it out. Like any business you need to keep a good size chunk of operating capital in the bank for surprises. And if you are trying to buy a rental and finance it you will find plenty of roadblocks. Most lenders today are not making loans on anything other than owner-occupied properties because of the disasters from 5 yrs ago. One more thing, you need to figure on a 25% vacancy rate to cover late payments and other problems. Tenants today have just as much trouble paying their rent as homeowners do paying their mortgages. If you can find a lender that will write you a mortgage on a rental, make sure 60% of the annual rent will cover 100% of the monthly mortgage payment. The remaining 15% must cover upkeep and that property manager. If you figure on the monthly rent covering the monthly mortgage payment, the first time the rent is late you will be in deep dodo. Stephen in Kentucky
Registered: 1354106284 Posts: 9
Reply with quote #5
Buying a property is a good idea of investing your property in proper way. Because by buying a house along with staying in that house you also can give rent to some of its parts. So, that you will get a life time income.
__________________ Miami Condo for Sale
Registered: 1351592164 Posts: 36
Reply with quote #6
While you wish to search out a decent rental then there square measure varied factors square measure obtained and that they square measure necessary to review confirm why you wish to shop for a rental property. a personal desires the additional monthly income from the rental property. Some more factors are necessary which help you to find a good rental.
Good rental history. Below market rents. Low maintenance buildings. High home prices. Less than 20 years old. Owner/manager that is out of state. Neighborhood is stable or improving. __________________ Property software | Real estate websites | Real estate software
Registered: 1356348233 Posts: 86
Reply with quote #7
The money to buy old houses for students and rent them out.
Registered: 1364033853 Posts: 31
Reply with quote #8
Why hire a property manager ?They charge about 9% here in Salem Oregon A bad one can overcharge for repairs or "forget" to report collected rents . They also are tempted to take people I would reject.Being retired and only owning a house or two does not require a manager. Choose a good property and select good tenants. You can do it.
Registered: 1366718906 Posts: 10
Reply with quote #9
Maxmillian i am agree with you there is no need of manager. Without any reason he will take 9% commission better all work you do yourself you can do it.
Registered: 1372654490 Posts: 9
Reply with quote #10
It seem that you save enough money and you got a pretty good plan for your retirement however i don't have any alternative way for you but seem that you have a pretty good idea you only need to do is to study well.In Finland we use to do warehouse for rent at
http://www.niemi.fi/ and now a days it is going smooth and i can't say that it is no successful because it is still starting and really need more to develop.
Registered: 1371538163 Posts: 47
Reply with quote #11
Hah, I was hoping that little line tossed out at the end would entice someone. :D
Real Estate is such a huge field, and there's so much to know, but you have to start somewhere. And if you find it interesting, then it's quite enjoyable learning different strategies, tools, and options available to you. __________________ Construction Management Software | Lean Construction | Last Planner System
Registered: 1402397572 Posts: 9
Reply with quote #12
Rental property management firms helps you find better deal on your rental property. They can provide you beat rental deals on your property that will make good benefits on your property.
__________________ Dwell Real Estate Group
Registered: 1405206449 Posts: 178
Reply with quote #13
I have 24 renters. Rental property can be a goldmine, or a nightmare. Read as much as you can, do not get fooled by high cash flow numbers. Where there is high cash flow, there is risk
Understand apartment classifications, and know what returns you should be getting. __________________ http://www.NoNonsenseLandlord.com/
Landlording for maximum profitability and Financial Independence
Registered: 1398506458 Posts: 28
Reply with quote #14
Rental properties are goldmines until and unless you have good people looking after it.
__________________ Kingsbury Homes
Registered: 1411117278 Posts: 2
Reply with quote #15
and know what returns you FIFA 15 Ultimate Team Coins should be getting.