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Location: Danbury CT covering all of Fairfield County
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$150,000 does not buy that much in my market, that would get you average small 2 bedroom 1 bath single floor condo built in the mid 1980s in average condition with no garage. The property would then rent for about $1350 a month plus all utilities. Monthly common fees would be $275 a month and annual property taxes of $2500 a year. Assuming no vacanies or repairs, after 1 year you would make $10,400 after expenses. Calculates to a rent of about 6.93%
My sister does this in San Antonio TX
she was working as teacher in Catholic school and helping friend of hers with a ranch north of SA--raised sheep--
sold sheep and got extra money from time to time
bought cheap rent houses in barrio--
yes--section 8 renters if she is lucky cause they pay rent and want to keep section 8 people happy and the govt pays regular as clockwork
she is fairly skilled with maintenance and collects her rent
knows the area pretty well
would go into business w/her doing management and us providing capital
we don't live in SA but it has strong rental market--lots of demand--but housing getting pretty expensive for ROI...taxes going up...
$150,000 does not buy that much in my market, that would get you average small 2 bedroom 1 bath single floor condo built in the mid 1980s in average condition with no garage. The property would then rent for about $1350 a month plus all utilities. Monthly common fees would be $275 a month and annual property taxes of $2500 a year. Assuming no vacanies or repairs, after 1 year you would make $10,400 after expenses. Calculates to a rent of about 6.93%
You don't use your $150K to buy the house. You use part of it as down and finance the rest. In fact if you buy with no mortgage you have no mortgage payment to deduct from your rent and you pay income taxes up the nose.
$150K in Phoenix would get you two 3BR 2BA, including master bedroom suite with separate bath & shower, kitchen with full appliances, open plan, built about '95-'00, 1700 sqft, 7000 sqft lot, 2 car garage, play pool (that's just a swimming pool a bit too small to have a diving board, big enough to lap, maybe 7-8 feet at deep end). Cost you about $63K each (25% down, 4.75% APR) including closing costs and fixing them up to perfect condition, and you'd still have $25K in change as an operating capital.
You would get about $1,400/month rent.
Insurance about $1000, taxes about $1300, HOA about $25-$50/month, mortgage about maybe $950 = $1,200/month.
Yeah, you're saying all that and I only get $200/month cash flow? Don't forget mortgage pay down and likely profit some day when you sell it for more than you bought it for.
Also keep in mind that the numbers are off the top of my head, and I'm worst casing it. I expect to get about $250/month positive cash flow after taxes and also my mortgage pay down. (I didn't add home warranty or maintenance either.)
The cash flow is the tip of the ice burg. The huge bulk under the water's surface is the mortgage pay down plus capital gains some day when you sell the house.
Personally, I'd go for a tiny apartment building with a mortgage to cover the difference. 150 in cash and 200 or so in mortgage. Prices have trended back up on the strength of low interest rates. Gains in price are uncertain over the next several years, but the cap rates should exceed the mortgage rates, so ROI will get pumped up from the leverage.
My sister does this in San Antonio TX
she was working as teacher in Catholic school and helping friend of hers with a ranch north of SA--raised sheep--
sold sheep and got extra money from time to time
bought cheap rent houses in barrio--
yes--section 8 renters if she is lucky cause they pay rent and want to keep section 8 people happy and the govt pays regular as clockwork
she is fairly skilled with maintenance and collects her rent
knows the area pretty well
would go into business w/her doing management and us providing capital
we don't live in SA but it has strong rental market--lots of demand--but housing getting pretty expensive for ROI...taxes going up...
So what's the question again? It would seem that you would follow your sisters approach as she will be your biz partner (that deserves a whooole nuther thread).
So you essentially will bankroll some properties that she will manage along with her portfolio and for sake of convenience and familiarity your sister will probably be picking up the same type of properties.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,603 posts, read 81,297,702 times
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Quote:
Originally Posted by Lovehound
You don't use your $150K to buy the house. You use part of it as down and finance the rest. In fact if you buy with no mortgage you have no mortgage payment to deduct from your rent and you pay income taxes up the nose.
$150K in Phoenix would get you two 3BR 2BA, including master bedroom suite with separate bath & shower, kitchen with full appliances, open plan, built about '95-'00, 1700 sqft, 7000 sqft lot, 2 car garage, play pool (that's just a swimming pool a bit too small to have a diving board, big enough to lap, maybe 7-8 feet at deep end). Cost you about $63K each (25% down, 4.75% APR) including closing costs and fixing them up to perfect condition, and you'd still have $25K in change as an operating capital.
You would get about $1,400/month rent.
Insurance about $1000, taxes about $1300, HOA about $25-$50/month, mortgage about maybe $950 = $1,200/month.
Yeah, you're saying all that and I only get $200/month cash flow? Don't forget mortgage pay down and likely profit some day when you sell it for more than you bought it for.
Also keep in mind that the numbers are off the top of my head, and I'm worst casing it. I expect to get about $250/month positive cash flow after taxes and also my mortgage pay down. (I didn't add home warranty or maintenance either.)
The cash flow is the tip of the ice burg. The huge bulk under the water's surface is the mortgage pay down plus capital gains some day when you sell the house.
With $150k down, it would be about 20% down on a single family residence here. Rent would be about $2,700. At 4% interest on a 30 year fixed that would be a break-even, but with taxes, insurance and maintenance you would lose money every month.
With $150k down, it would be about 20% down on a single family residence here. Rent would be about $2,700. At 4% interest on a 30 year fixed that would be a break-even, but with taxes, insurance and maintenance you would lose money every month.
You're saying that $150K is 20% down? Your houses cost $750K???
If so, my advice is either get into another line of work or get into another geographic location for your business.
I'm putting 25% down on $225K houses and getting about $1400-$1500/month. 4.75% APR
The topic is about investing $150K. Who would spend the whole wad on one house?
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You do not really want that IN YOUR area.
