Wanting to buy a house in Bedford to rent while I live in Irving (rental)

[TexasDude84]

Just trying to get information on this.


I would continue to rent in Irving, and rent out my first and only property in Bedford. Currently I see homes for 180-210 that can rent for 1500-1700, and the mortgage, at ZERO DOWN, would be around 1,000. Even factoring in property tax + insurance I would turn a profit. Maybe not if I used a property management company. Even if I broke even, I get a free house. They pay my mortgage for X months and Y years until I just want to move in on my own and I already have a huge head start on the mortgage.


I'm very confused because this seems like a good idea, and too good to be true.


I don't really understand homesteading, property taxes on a rental, how big of a deal vacancy would be, if I need a property management company given I can't fix a toilet, etc.


Good or bad idea?

[mSooner]

the mortgage, at ZERO DOWN, would be around 1,000.

Do you currently own the Bedford property or looking to buy?

Don't forget property taxes (which will be higher than they currently are because you will lose your homestead exemption on your current property if you own it now) and home insurance, which will also be higher in an investment property.

If you are buying a property with intent to rent it, the mortgage process is going to be more strict. You have to wait X amount of time (don't know details) to do that under a conventional loan. I'm skeptical that you could buy an investment home with zero down.

There are also income tax implications, but I cannot speak to that specifically.

You don't need property management if you cannot fix a toilet, but you will need a good handyman, plumber, etc. and a lot of patience.

[TurtleCreek80]

1. You're going to be bidding against investors offering all cash offers so a $0 down offer is not going to be competitive....if you could even get a rental mortgage approved with $0 down. Do you have money saved to pay closing costs on the rental, and also 6 months of mortgage/interest/ taxes/ insurance saved? The bank will expect you to have 6 months of "reserves" in the bank.

2. Can you afford both places if you didn't have a tenant for the Bedford house? The bank is going to make sure you can or you won't qualify for the rental mortgage.

3. You will have to pay the full property tax amount on the rental home (could be about 20% higher than the homestead amount) AND you will have to pay income taxes on your rental profits.

4. Do you truly want to be a landlord? You're on call 24/7 should the garage door break or sprinkler head bust. Will you be picky enough to get a tenant who will always pay the rent on time and in full? Do you know a good attorney should you have a tenant stop paying rent? I'd count on turning over tenants every year and having the house empty for 1-2 months between tenants. You could definitely get lucky and find a fabulous tenant who stays for years and treats the home as if it's their own but that is not the norm when you're a landlord.

Being a landlord can be lucrative BUT it is not the "easy money quick" scheme you might believe.

[Rakin]

Originally Posted by TurtleCreek80

1. You're going to be bidding against investors offering all cash offers so a $0 down offer is not going to be competitive....if you could even get a rental mortgage approved with $0 down. Do you have money saved to pay closing costs on the rental, and also 6 months of mortgage/interest/ taxes/ insurance saved? The bank will expect you to have 6 months of "reserves" in the bank.

Lenders are going to require at least a 20% down on an Investment home. He better have at least $50k in the bank to buy this home. Maybe if he's a Vet he can do better.

Finding a decent rentable home in this price range is next to impossible.

You are better buying a home to live in for a couple of years while you save to buy a 2nd home.

[TeamLynn]

Not as EASY as it seems in most cases.
You've built no risk into the equation.
That is hard to calculate.
Vacancy is one risk, repairs is another, there are others.
Times are good now, but they will change.
Places rent quickly now, but hasn't been that long ago they sat for 3-4-5 months sometimes.
Property manager typically take 10% of your rent, but they can also be great at collecting late fees and making sure the property complies with the laws and you do things the right way to keep out of trouble. They're good at negotiating deposits. So they can be worth their price.

[loves2read]

You think this is a no-brainier for making you rich
Think again

[WorldKlas]

It can work, but only if you have savings. The big challenge in today's market is asset acquisition. Any worthwhile property under $250K has extreme compeition of other bidders -- so your purchase offer must be attractive to the seller in terms and purchase price. No money down for an investment house is impossible.

If you work in Irving, just buy that house in Bedford and live in it for a couple of years before you decide to lease it out. Bedford is a very good investment area, especially north of 183. Being a landlord can be financially rewarding if you know what you are doing. Using a property manager is not a good idea IMO; you need to learn DIY skills or have a great relationship with a good handyman.