Author Topic: So many options so little money!  (Read 817 times)

reese_c_c

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So many options so little money!
« on: December 31, 2018, 05:39:26 AM »
My family and I are thinking about moving into the rental property scene. The town where we live seems to do pretty well with rentals because of the oil refinery (where I work) expansions that seem to never end. A few years ago quite a few RV parks cropped up for this so we missed that boat but we were not in a place to make that type of investment. However, now we are in a completely different financial situation and would like to expand our portfolio some and look into this side of the market. My quandary is this:

House 1: 3/1 single story 1750sqft $115k. 1950's model. Needs a little work but nothing I couldn't do myself.
House 2: 3/2.5 double story 2200sqft $169k. 1975 model, no work to speak of.
House 3: 3/1.5 single story 1780sqft (paid for $65k+$20k upgrades). 1950 model. Our house has been updated compared to the surrounding properties.

I'm curious is it better to purchase H1 and rent it? H2 and rent it? Or H2, move into it and rent H3? Based on other properties in the area and for what other renters pay I think we could easily do $1000/month on any of these properties. Potentially more with H2, but I can't imagine much more. I haven't gone so far as to look at loans, rates, etc. Just curious what others' opinions were.

Thanks

waltworks

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Re: So many options so little money!
« Reply #1 on: December 31, 2018, 11:39:14 AM »
When you say "do $1000 a month", do you mean they would rent for $1000 a month? Because if so, those are not good rental properties.

Read the "rent or sell" sticky at the top of the forum and give us hard numbers for everything and we can give you more useful feedback, though.

-W

reese_c_c

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Re: So many options so little money!
« Reply #2 on: December 31, 2018, 01:28:56 PM »
-waltworks, here's my best attempt at your request without me actually applying for a mortgage, etc. I just used the estimated mortgage/tax calculator on HAR.

Market Value:
Original Purchase price: $115,000
Original Mortgage Amount: $92,000
Interest Rate: 4%
Mortgage Term: 30
Term remaining: 30
Amount remaining on mortgage: $92,000
Gross Rents: $0
Principal and Interest (the P&I of your PITI - should match with the above info): $439
Taxes and Insurance (the T&I of your PITI): $350
HOA costs:$0
Deferred maintenance notes: $0
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): N/A

I won't even put H2 on here. I think when I was doing the quick search on these I stopped at the P&I and forgot to add in the T&I. H2 is out the window. As for H1, that only nets right at $200/month. I'm assuming this is why this isn't a good option. Back to the drawing board I guess.

waltworks

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Re: So many options so little money!
« Reply #3 on: December 31, 2018, 02:46:31 PM »
You'll need to put down 25% on a non-owner-occupied property in most cases, and you'll pay more like 5% right now for your mortgage (rates are higher for rental properties). But the mortgage and insurance costs are probably close.

Assuming a freestanding structure, I'd budget $200-300 a month for maintenance and capex. Make some subtractions for vacancy and management costs and you're at a considerable negative cash flow each month over the long term.

-W

reese_c_c

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Re: So many options so little money!
« Reply #4 on: December 31, 2018, 03:06:06 PM »
Thanks for the input.

Jon Bon

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Re: So many options so little money!
« Reply #5 on: January 01, 2019, 05:21:35 AM »
I love rentals, have a few and it's a great way to build wealth.

I paid $1.63 for a gallon of gas yesterday.

I can't predict the future on oil procea but that cannot bode well for shale boomtowns.

Also look at multifamilies if available.