Educate me on rental properties.

Strizzo wrote: g/f's dad has a rental property, rather than random inspections, he comes by and checks the smoke detectors and changes the air filters in the a/c every month so he can keep an eye on things.

yep.

Can't believe this hasn't been mentioned yet, and I hate to burst your bubble, but call any mortgage company and try to get a loan for $70k...worse, two loans at whatever the individual amount was. If they haven't hung up or started laughing hysterically, tell them these will both be rental properties.

The bank knows that god forbid, you lose your job, have a medical emergency, etc., the first thing you're going to stop paying a note on is the house you don't live in...which they can't do a damned thing with.

If you get to the point where you can plunk down $30k cash, Clark Howard has a good book on Real Estate investment that I'll be happy to send your way.

In reply to poopshovel:
That is why you take out a loan on a house you do live in.

jrw1621 wrote: Refi your own house, the one you live in. Get favorable rates on mortgage for a house that you live in. Pull all that refi money out and use that money to pay cash for rental houses. Purchase those houses in the name of an LLC as suggested. Worst that happens here is that you have to walk away from the rental properties by letting the LLC get crushed and then you have to continue to make payments on a house that you have bought once already.

We had trouble finding a company that would loan 100k on a rental house (for our daughter). Payment is around 600 per month and houses in the neighborhood would rent for around 1,000.

jrw1621 wrote: In reply to poopshovel: That is why you take out a loan on a house you do live in.

jrw1621 wrote: Refi your own house, the one you live in. Get favorable rates on mortgage for a house that you live in. Pull all that refi money out and use that money to pay cash for rental houses. Purchase those houses in the name of an LLC as suggested. Worst that happens here is that you have to walk away from the rental properties by letting the LLC get crushed and then you have to continue to make payments on a house that you have bought once already.

DOH! Missed that one. What the berkeley do I know!?

The other option that I didn't see mentioned and is what I would consider is, buy both, flip the best one and pay off the loan. Then have two paid for houses.

db wrote: The other option that I didn't see mentioned and is what I would consider is, buy both, flip the best one and pay off the loan. Then have two paid for houses.

Don't know how easy it would be, but this paired with the refi on your current house seems to be the best solution if possible.

1. Setup a Land Trust to own the properties that will help to protect you against lawsuits etc.

2. Join a local landlord association that will allow you to cheaply and easily perform credit checks on potential renters.

3. List properties for free on Craigslist.

4. Don't listen to advice from drunk people in bars.
   A guy once said to me "never rent to japs, chinks, dotheads, queers or n-words" ( I can't even type the last term but you know what it was) That remains the most racist single statement I had ever heard. Unsolicited too. He overheard my conversation with a friend and just walked up, said it, then stumbled away. Wow. Just...wow. I wish I could have slipped a small explosive into his back pocket.

poopshovel wrote: If you get to the point where you can plunk down $30k cash, Clark Howard has a good book on Real Estate investment that I'll be happy to send your way.

poopie, don't you think $30k cash is an awful lot of money for a used book?

AngryCorvair wrote:

poopshovel wrote: If you get to the point where you can plunk down $30k cash, Clark Howard has a good book on Real Estate investment that I'll be happy to send your way.

poopie, don't you think $30k cash is an awful lot of money for a used book?

Hey man, there's one born every minute, and it's a sin not to seperate him from his money.

Plunk whole house on low interest credit card roll over with better deals every year or so . Paint fix ASAP new property rent ,, pay off credit card to the toon of a 20 grand balance then skate enjoy the landlord life . Get a nice mortgage on original house and reinvest in other areas IE junk cars , quik turnover cars . Give wife some cash to freshen up your house .

Let me preface this by saying I had zero interest in being a landlord, and ended up being one anyway. So far, so good.

I'm renting the house I bought 25 years ago. My original intention was to sell it when we moved, so I put about $10k in it to get it ready to sell. New roof, new carpet, new paint in and out, and refurbished the kitchen and bath. We had it on the market for 6 months with very little interest, other than tire kickers. We ended up refinancing it for the down payment on the new house. The payment on it is $800 a month. I'm renting it for $1200 a month. The extra $400 a month, I'm banking until I get a years worth of payments built up in that house's account. That will cover any repairs and the payment if it sits empty for a couple of months. After that, it will all go to paying down the principle.

I probably got lucky on the renters. It was listed less than a week on Craigslist. They are a couple of single guys in their late 20s, both of them are salesmen. Their check is always on time, and in the last 4 months, I've heard from them twice about problems. One, the heat pump quit due to a bad breaker. The second, squirrels in the attic. The house is always spotless, and none of our previous neighbors have called to complain.

Everything I know about being a landlord comes from my sister and her husband. Last I checked they had 26 rental properties, one of them being a small 5 unit apartment building. Their rules are simple. Rule 1: Own in the yuppy part of town. You get a better quality tenant with the higher rental income that goes with it. Rule 2: After building up a bank for lean times, roll everything back into the property, either paying down the mortgage, or making necessary repairs. The other option is buying another house. Rule 3: Don't think in terms of income, think in terms of retirement. All 26 properties they own will pay off about the time they retire. That will net them an income of about $20K a month to retire on. So rather than taking a pay cut when they retire, their income will go up...a lot. They got started by never selling their first house. It has snowballed since then.

Once the dust settles from this house move, and I get the bank built up where it needs to be, I'm probably going to start looking for rental number 2.

Toyman01 wrote: Rule 3: Don't think in terms of income, think in terms of retirement. All 26 properties they own will pay off about the time they retire. That will net them an income of about $20K a month to retire on. So rather than taking a pay cut when they retire, their income will go up...a lot.

Yup! I bought a 4-unit at age 29 to live in and rent the other units, the 30 year note will be paid off right when I plan on needing the income, if not well before then. I plan on doing this all over again if/when I move away from here, and I will probably be able to afford shorter mortgage terms on any future purchases. My dad's 61 with barely any retirement savings and I don't want that to happen to me. My goal is to have either enough rental income to live on or enough equity built up that I can cash out and retire by that age.

My only advice: get an idea of landlord/tenant law in your area. You likely will never need to defend yourself because most tenants are never going to a lawyer, and if they do you better get professional help, but it'll help you plan how to handle bad tenants. If you have to evict a tenant, you want to do it right.

My dad did rental real estate all his life. At his death, he owned: two triplexes, an 11 unit complex, an eight unit complex, a combination duplex/cottage, and... one rental house. See a pattern?

Pops stayed away from single family houses for various reasons; the one he did own was where his maintenance guy lived rent free. Dad put him in the house, paid the water etc, then paid him a small weekly salary. made them both happy, the guy had a nice place to live and Dad's maintenance costs were fixed eaxh month, no huge surprises.

I am not saying it won't work, just be aware of the pitfalls. If you have a triplex, if one goes vacant the others will keep the mortgage current till you get it back to 100% again.

OTOH, a house, if vacant, has nothing to help it along and that was Dad's single biggest concern about single family home rental. Your current mortgage being paid off is a good point in your favor and would help a lot, having a second rental house would also be a help..

My suggestion: mortgage your current house. Buy both foreclosures. Fix them up and get them rented, then flip them as soon as they are rented, pick up maybe an extra $30k or so. Pay off mortgage, bank the profit and look for a fourplex etc.

Great information so far in this thread. I'm very interested in the concept and would love to build up a rental portfolio that would support me 20 years from now as my retirement income. Please keep the thoughts coming.