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Acquiring Rental Property

Discussion in 'General' started by Gorilla George, Feb 14, 2020.

  1. motomadman217

    motomadman217 Well-Known Member

    When your portfolio is pulling more interest than the mortgage on a rental would be the time to finance it. If the yield on your portfolio drops below what the mortgage rate is pay it off. Your in this to make money right? Well make as much as you can.
     
    Gorilla George and R Acree like this.
  2. JJJerry

    JJJerry Well-Known Member

    Option 1 helps you sleep better at night.
    Option 2 is typically better numbers if you're immune to debt anxiety.

    I'm an option 1 kind of guy.

    The market we've experienced lately may lead to some optimism regarding possible returns vs. interest paid on a mortgage, it can go the other direction any day however.
     
    Gorilla George likes this.
  3. JJJerry

    JJJerry Well-Known Member

    Side note - option 3 (or 4?) is to create an LLC, and purchase multiple properties under that. Then your personal assets are somewhat protected if the mortgages to tits up. Please consult your local business advisor, YMMV :D
     
  4. Tristan

    Tristan Well-Known Member

    From what we've seen of his culinary choices, do you really think this was a possibility?
     
    Gorilla George, HPPT and R Acree like this.
  5. motion

    motion Nihilistic Member

    Buying rental properties will make the remainder of your life miserable. I own several and absolutely hate the decision I made to get into them. I'm stuck now, so it is what it is. If I had put that money into the market, I'd have several million in the bank right now.
     
    SuddenBraking likes this.
  6. TurboBlew

    TurboBlew Registers Abusers

    rental properties = 95% of the work is on the front end. Screening tenants,repairs, deposits, and leases etc. LLC is a good idea.
     
    The Great One likes this.
  7. rd49

    rd49 Well-Known Member

    Sure a chain of Velvetta restaurants. :D
     
  8. brex

    brex Well-Known Member

    Full disclosure, I divested myself of all homes and all but two condo units years ago. I could have made a greater overall profit on the properties had I waited until the current local housing market, but it just wasn't worth it to me any more. Houses sucked ass, no matter how good your tenants are none of them care about the place and will ding it up. So tip number one if you decide to go with houses, buy shitty ones. Don't buy a nicer home thinking renting to higher quality tenants will be better. But nothing special condo units close to a local university is THE way to go. The only units I have left are two of those. And considering dumping them as I could sell them for stupid money right now, about 4x what I paid for them way back.
    But the rental market is necessary, someone needs to do it. I just choose to leverage my money differently now.

    And I'd still recommend mortgaging the home and investing the cash in other markets. if you do this.
     
    Gorilla George likes this.
  9. ScottyRock155

    ScottyRock155 A T-Rex going RAWR!

    My friend rents 3 houses, he has a management company take care of every detail like finding people/leases/repairs/deposits/rent. The rental company sends him a check every month with their fee taken out, he is 100% hands off the properties. I wouldn't even consider doing it any other way.
     
    brex likes this.
  10. Steeltoe

    Steeltoe What's my move?

    Surprised nobody mentioned it yet.

    This fool needs to buy a petting zoo.

    He can charge other idgits like himself to talk to the animals who pretend to like him even though they just want food.
     
    969, StaccatoFan, dtalbott and 2 others like this.
  11. cav115

    cav115 Well-Known Member


    This.

    But the way the market is now, your money is much better off in a high yield fund. Growth fund of America is reasonably stable and is yielding 15-18%. Has averaged 13% for the last 20 yrs...

    As was said, find a good investment guy.
     
    nd4spd likes this.
  12. cav115

    cav115 Well-Known Member


    Do both... no debt, let your money work! :D
     
  13. Newyork

    Newyork Dip Mode

    Wife and I are in the process of selling our second home in Florida to buy an oceanfront condo/townhouse as a rental.

    We have been struggling with the exact same question...in our case tho the money from the house sale most likely won’t be enough for the condo we want so we may have to pony up either way.

    Subscribed.


    Sent from my iPhone using Tapatalk
     
  14. Big T

    Big T Well-Known Member

    Outside of the financial aspects, I can't imagine you living in a condo.

    Other people will run your life, and you signed up for it.

    Having dealt with many condo boards, as an insurance adjuster, I can tell you that you won't find a bigger group of meddlers and idiots than a condo board. And the lawyers are the worst members.
     
    Yzasserina likes this.
  15. twodocs

    twodocs Well-Known Member

    Gorilla George likes this.
  16. R Acree

    R Acree Banned

    Laugh if you wish, there are probably enough troglodytes out there that one could survive.
     
  17. tony 340

    tony 340 Well-Known Member

    Fuuuuuuck renting. Way too many rules in the favor of the renter and not you.

    Only thing I MIGHT consider with a paid off house is selling it Land Contract. People actually take care of it, and if they choke, you keep your house and their money.

    Sell the house, take the cash and invest it. You'll make easily 4x the amount of money you would renting if you have a reputable financial guy. If you do not have one you trust feel free to PM me. Me and my guy do everything via text. Since trumps election I am about 220% of where I started.

    Think of it this way. I made 26% last year. That's 26K for every 100,000 value of your house.

    If you gave my guy 400K you would have made 104,000. Just last year.

    IF you are set on renting, set the house up as its own seperate LLC. Get a good LOCAL accountant and lawyer that has been around for at least 5 years and is reputable. They will most likely tell you not to pay cash for the house also. Carry good insurance.
     
    Gorilla George likes this.
  18. rd49

    rd49 Well-Known Member

    I wasn’t laughing I was quite serious.
     
  19. eggfooyoung

    eggfooyoung You no eat more!

    I only have 5, but dude, it ain't for you. I dont say that to be an asshole, I say because you have a somewhat short interest span, zero tolerance for bullshit and zero patience. It requires all 3, and it isn't something that you can hover over at 1000', or even 100'. You have to hover at 10', at the most, without hiring a rental/maintenance firm.

    Having said that, mine are middle of the road 3/1, 3/2's, without huge mortgages.

    If it wasn't mentioned already, interest rates a higher for commercial loans, and so is insurance.
     
    Gorilla George likes this.
  20. eggfooyoung

    eggfooyoung You no eat more!

    If you do end up financing any of it, small banks are your friend. Those little 1,2,3 branch banks.
     

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