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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#327996
04/30/12 09:29 PM
04/30/12 09:29 PM
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Joined: Dec 2009
Posts: 9,519 Trussville
toothdoc
14 point
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14 point
Joined: Dec 2009
Posts: 9,519
Trussville
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328003
04/30/12 09:41 PM
04/30/12 09:41 PM
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Joined: Sep 2002
Posts: 8,180 Coffee Co, AL
jlccoffee
14 point
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14 point
Joined: Sep 2002
Posts: 8,180
Coffee Co, AL
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I don't know the answer to your question, but I don't think cash is the best way. When I have the cash to buy rental properties, I still prefer to borrow and just keep that cash in reserve most of the time. I think the return on investment is too low when you use your own money versus what it costs you to use the bank's money and buy more properties.
For example, if you buy a house that costs $21,000 and pay $7000 while borrowing $14,000 for 30 years you will pay the bank less than $100 per month (actually less than that if you start figuring in the tax deduction but lets keep it simple and say $100). So you make each month on that $7000 the rent minus the $100 minus other expenses plus appreciation (hopefully). If you go ahead and pay the other $14000 you will make another $100 (not paying the bank), or you could take the $14,000 and buy two more $21,000 houses.
Just my opinion though and I can see why some people prefer cash.
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Re: Mortgage options for investment and rental properties
[Re: trox28]
#328087
05/01/12 07:31 AM
05/01/12 07:31 AM
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Joined: Dec 2010
Posts: 1,727 Bammer
TCEncore308
8 point
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8 point
Joined: Dec 2010
Posts: 1,727
Bammer
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I wanna know where you finding 21,000 dollar houses. In da hood
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328129
05/01/12 09:28 AM
05/01/12 09:28 AM
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Joined: Aug 2007
Posts: 12,828 West Tennessee
BamaProud
Booner
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Booner
Joined: Aug 2007
Posts: 12,828
West Tennessee
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I was talking just last Saturday with a Real Estate Agent about rental properties. Renting is becoming very lucrative with all of the foreclosures/short sales that are happening. Those people won't be able to obtain a mortgage for 2-4 years in most cases and will be looking to rent. Most simply got in over their heads in their previous homes.
If I were to get into rental property I would shy away from any property that would rent for less than 2,000/month rent. Higher rent generally(not always) eliminates some of the likelihood you run into problems from renters. It can be risky, but profitable.
Save the Little ones for the little ones
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Re: Mortgage options for investment and rental properties
[Re: BamaProud]
#328139
05/01/12 09:41 AM
05/01/12 09:41 AM
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Joined: Dec 2009
Posts: 9,519 Trussville
toothdoc
14 point
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14 point
Joined: Dec 2009
Posts: 9,519
Trussville
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I was talking just last Saturday with a Real Estate Agent about rental properties. Renting is becoming very lucrative with all of the foreclosures/short sales that are happening. Those people won't be able to obtain a mortgage for 2-4 years in most cases and will be looking to rent. Most simply got in over their heads in their previous homes.
If I were to get into rental property I would shy away from any property that would rent for less than 2,000/month rent. Higher rent generally(not always) eliminates some of the likelihood you run into problems from renters. It can be risky, but profitable. Wrong.
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Re: Mortgage options for investment and rental properties
[Re: BamaProud]
#328143
05/01/12 09:47 AM
05/01/12 09:47 AM
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Joined: Sep 2002
Posts: 8,180 Coffee Co, AL
jlccoffee
14 point
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14 point
Joined: Sep 2002
Posts: 8,180
Coffee Co, AL
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I was talking just last Saturday with a Real Estate Agent about rental properties. Renting is becoming very lucrative with all of the foreclosures/short sales that are happening. Those people won't be able to obtain a mortgage for 2-4 years in most cases and will be looking to rent. Most simply got in over their heads in their previous homes.
If I were to get into rental property I would shy away from any property that would rent for less than 2,000/month rent. Higher rent generally(not always) eliminates some of the likelihood you run into problems from renters. It can be risky, but profitable.
That might work some places but would not work here.
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Re: Mortgage options for investment and rental properties
[Re: toothdoc]
#328147
05/01/12 09:59 AM
05/01/12 09:59 AM
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Joined: Aug 2007
Posts: 12,828 West Tennessee
BamaProud
Booner
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Booner
Joined: Aug 2007
Posts: 12,828
West Tennessee
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OK. Care to explain. Just passing along information given to me from someone in the business. That information may pertain to just my market...but it stands to reason that renting to low income tenants would be more risky.
Save the Little ones for the little ones
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328193
05/01/12 11:06 AM
05/01/12 11:06 AM
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Joined: Apr 2000
Posts: 12,247 Oxford, AL. USA
Big Game Hunter
Doesn’t Know His Code
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Doesn’t Know His Code
Joined: Apr 2000
Posts: 12,247
Oxford, AL. USA
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I have a few houses and all of them are values at $65,000-$100,000.
It is easier, if you have the cash, to buy properties outright over borrowing from the bank. I prefer to borrow from the bank for the reasons mentioned above.
I want houses that generate $700-900 per month rent. Once you go below $650 per month you get into a different group of people. I agree that not all of them are bad but there seem to more in that price break. I also don't want house above $1000 per month because you have a very small pool of people that can afford that much in rent that won't just buy.
As long as you can get 1% of what you owe on the house in rent you can come out.
The way I look at it is I am letting someone pay my mortgage for me. I still make money each month on the rentals but I am looking at it for the long haul. When I am at retirement age, I will have all these houses paid for and a nice lump of cash each month to play with.
But to answer your question, BB&T is a good bank to work with on investment loans.
IKNOWMYPHUCKINGCODEDAMMITYOUDICKHEAD!!!
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328195
05/01/12 11:08 AM
05/01/12 11:08 AM
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Joined: Apr 2000
Posts: 12,247 Oxford, AL. USA
Big Game Hunter
Doesn’t Know His Code
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Doesn’t Know His Code
Joined: Apr 2000
Posts: 12,247
Oxford, AL. USA
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Also you can try a home town credit union.
The smaller company's seem to be easier to work with.
IKNOWMYPHUCKINGCODEDAMMITYOUDICKHEAD!!!
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Re: Mortgage options for investment and rental properties
[Re: jlccoffee]
#328216
05/01/12 11:33 AM
05/01/12 11:33 AM
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Joined: Aug 2007
Posts: 12,828 West Tennessee
BamaProud
Booner
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Booner
Joined: Aug 2007
Posts: 12,828
West Tennessee
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I actually think lower rent is less risky. You have less valuable assets and amendities at risk and since you can have many more units in theory with the same investment, you spread out your risk.
Low income people are not all bad people. They key is in the screening process in my opinion.
Also, when you get into higher value properties, many of the people that might rent would rather just go ahead and buy. I suspect you would have turnover as well as renters become buyers. Some lower income renters may stay with you for years and years as they have no ambition to own.
Like you said though, know your market. I just don't think it would work where I am. I have seen some people try it and it not work out in this area. I'm not talking $2000 rent but a higher rent properties relative to the area. My conversation revolved around only obtaining 1 rental unit. I can understand the concept of obtaining many smaller units and spreading the risk around more. That makes sense, but in my case (if I even get involved) I would only want to maintain 1 unit. Multiple units sounds like a 2nd job...and that definitely isn't what I am looking for.
Save the Little ones for the little ones
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328223
05/01/12 11:36 AM
05/01/12 11:36 AM
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Joined: Sep 2004
Posts: 2,777 Athens, GA
WildlifeBiologist
10 point
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10 point
Joined: Sep 2004
Posts: 2,777
Athens, GA
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In my experience, higher end homes attract two classes of renters. There are those who can easily afford it and are rebuilding credit. But then it also attracts the less desirables who intend to turn it into multi-family dwelling.
I have a business associate who owns over 100 rental houses and does very well with it. His sweet spot is to buy a foreclosed or short sell house that was valued in the $130K price range before the bank took it over. Then he rents it for $1500-1800 a month.
Micah 6:8
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328233
05/01/12 11:49 AM
05/01/12 11:49 AM
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Joined: Jul 2005
Posts: 19,095 Chelsea, AL
straycat
Old Mossy Horns
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Old Mossy Horns
Joined: Jul 2005
Posts: 19,095
Chelsea, AL
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I've got a friend who does nothing but Section 8 housing over on the Western side of B'ham. Yes, he has some minimum standards to meet for the Fed, but his income is pretty much locked in and guaranteed. If the Renters don't pay their portion or if they abuse the property, then they are out pretty quick with a simple call to his contact.
He finds distressed properties, puts a little money in them to make them decent, and screens the people extra good. He spends about 4-6 hours per month taking care of stuff and has cash rolling in. Kids college already funded (3), rest into retirement and other investments. He is 40 now and can easily retire in about 10 years.
I've been interested in doing some rental properties myself, maybe not Section 8 though.
"The grass withers, the flower fades, But the word of our God stands forever." Isaiah 40:8
"Neither the wisest constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt.� Samuel Adams
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Re: Mortgage options for investment and rental properties
[Re: Acorn]
#328238
05/01/12 11:56 AM
05/01/12 11:56 AM
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Joined: Apr 2007
Posts: 3,633 Gardendale
BigDalk
10 point
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10 point
Joined: Apr 2007
Posts: 3,633
Gardendale
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we are renting out our first (starter) home right now. It wasn't my choice but we couldn't sell it and desperately wanted to move. Once I refi it, I will net around $300 a month over the mortgage payment. That is all going into a separate account for upkeep and repairs. It hasn't been the nightmare that I expected but rather smooth so far. Carefully choose your tenants.
Give my mortgage broker Shanon Hayes a call at 205 283 9911. If it can be done, she can do it and has several lenders to choose from unlike dealing with a bank.
"The aggies are going to destroy bama" Burbank
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Re: Mortgage options for investment and rental properties
[Re: BigDalk]
#328245
05/01/12 12:07 PM
05/01/12 12:07 PM
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Joined: May 2002
Posts: 8,030 Central Alabama
muzziehead
14 point
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14 point
Joined: May 2002
Posts: 8,030
Central Alabama
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Carefully choose your tenants. Be careful is an understatement. You better be careful that you don't discriminate against anyone, any race or otherwise, you may find yourself on the wrong end of a big fine. And, believe me when I tell you that our gov't has folks out there right now that are attempting to rent and or buy properties, and if you happen to get one of those and you turn them away for the wrong reason, God help you. Fair Housing Act is nothing to play around with, trust me.
"Don't cling to Mistake, just because you spent a lot of time making it."
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Re: Mortgage options for investment and rental properties
[Re: BamaProud]
#328521
05/01/12 09:24 PM
05/01/12 09:24 PM
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Joined: Sep 2007
Posts: 3,190 Shelby County
bloodtrail
10 point
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10 point
Joined: Sep 2007
Posts: 3,190
Shelby County
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I was talking just last Saturday with a Real Estate Agent about rental properties. Renting is becoming very lucrative with all of the foreclosures/short sales that are happening. Those people won't be able to obtain a mortgage for 2-4 years in most cases and will be looking to rent. Most simply got in over their heads in their previous homes.
If I were to get into rental property I would shy away from any property that would rent for less than 2,000/month rent. Higher rent generally(not always) eliminates some of the likelihood you run into problems from renters. It can be risky, but profitable. Real estate agents sell houses, I wouldn't trust them to invest my money. If its so lucrative how many does the agent own??? Bigger houses are more expensive to maintain; carpet, paint, roof, ect. There is also a smaller market for bigger/higher rent houses, and in Alabama usually short term tenants.
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