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hi, so, as some of you may know from a couple of my other threads, i've narrowed my decision as far as what to do with a 3k/month surplus and have decided to look into purchasing a condo to rent.
facts:
condo is in a great location - VERY popular zip code
metro being built within a mile
1 bd 1 bath ~700 sqft
about 25 yrs old but move in ready
cost: 200k
down payment: 50k
rate: 3.62
points: 0
closing: 4100 (will try to have it paid by seller but we'll see)
I have been researching similar investments. In your case, you have to budget for repairs and one month per year of vacancy. You might have to increase your downpayment so you can make a profit on a monthly basis or at least break even. In my mind, spending out of pocket does not make much sense, because then you are only hoping that the property price is gonna go up and that is not always the case (and you don't really have to go back in history to figure that!).
Good location is great, but could it go down? I am in CA and there is a lot of transition. Parts that used to be upscale 40 years ago are considered a dump now.
Also, who is going to manage the repairs etc. If you are, then fine, if you have to get someone else to do it, that will cost you too.
Comparable rent is the MOST important factor to research... before anyone gives you advice you should thoroughly research this and let us know the monthly rent you can get.
Once you decide to deliberately be an active LL then do what you can to keep that activity to a minimum.
Look for properties similar to what you already have and in the same area.
Personally... I'd never choose to rent a property in a condo or HOA.
I would not rent out any property which has monthly payments like a condo. People have only so much to spend on rent per month. So that would reduce your income. Not to mention the drain if it sat empty for awhile.
You appear to have one rental already so you probably already know what you are getting into. There's little advice I would offer but to learn your state's property codes, as well as any that your county and municipality have. Your tenants will know them well.
I've made some bad real estate investments in my lifetime, but that one makes my worst sound great. I've got one left. Want it?
Really, I know you could do much better. You're proposing a $50K cash investment with negative cash flow. A savings account sounds better from many angles.
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