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i think i'm in a great position to buy a house. I'm living on Long Island, NY. i have a very specific plan in mind though and wondering if anyone could give me some insight/tips/advice...
i want to buy a house that has an apartment in it to get rental income of at least $1,000/month. I would also be living with my boyfriend (but he would not help towards the down payment) and he would contribute about $1,000/month in rent as well. i know it sounds kind of odd for me to charge my boyfriend rent, but he would have to contribute if he is living there.
so i would have $2k/month to contribute to the mortgage, hopefully that would cover the mortgage. then i can pay utilities and taxes.
that is my short term plan.
my long term plan would be to get to a point where i can then rent out the other portion of the house for about $2,000-$2,500/month in addition to the small apartment of $1,000/month... for a total rental income of $3000-$3500/month, and then buy another house for me and my boyfriend to live in (Hopefully we would be married at that point and we can pool our money together).
is this plan feasible? any issues i'm not thinking of? besides the issues of being a landlord. i understand that comes with a lot of responsibility.
edit: the other issue is i would have to plan for the WORST case scenario which is - my boyfriend and i break up and i cannot rent out the apartment, in which case the cost of EVERYTHING would fall on me. how much emergency fund would i need? 6 months worth of those expenses?
For real, though, do you know how much you qualify for?
Does the town where you want to buy allow rentals to non-family members, etc?
Should i find out how much i qualify for? my credit score is good, i have no debt and i have a lot of cash in the bank, so i would have the 20% down payment for anything $400k or less.
A lot of the towns near where i live have illegal apartments in them, so it would most likely be an illegal rental.
Is that really how you want to start your real estate investment career?
If you don't know how much you can afford, how did you come up with your rent numbers??
i was living in a basement apartment for a year and i paid $1150. and it was crappy lol. so as long as the apartment is reasonable i would expect to receive $1000 in rent. in addition to that, when i was apartment hunting on craigslist there were no apartments for less than $1000/month. maybe i should be conservative and expect $900 at the least.
at the moment, i live in ANOTHER illegal apartment with my boyfriend and the rent is $1900 for a 2 bedroom. we split it 50/50 so $950 each.... so i would expect him to pay me around the same amount. and again, it is EXTREMELY hard to find an apartment on long island for less than $1000/month, so i would expect him to give me around that. again, maybe $900 at the least.
as to wanting to start off that way, i dont know, SO many people do it. the few houses within a mile of where i live there a bunch of houses that have illegal apartments. and i have lived in two of them, so i know that they exist and people do it
i was living in a basement apartment for a year and i paid $1150. and it was crappy lol. so as long as the apartment is reasonable i would expect to receive $1000 in rent. in addition to that, when i was apartment hunting on craigslist there were no apartments for less than $1000/month. maybe i should be conservative and expect $900 at the least.
at the moment, i live in ANOTHER illegal apartment with my boyfriend and the rent is $1900 for a 2 bedroom. we split it 50/50 so $950 each.... so i would expect him to pay me around the same amount. and again, it is EXTREMELY hard to find an apartment on long island for less than $1000/month, so i would expect him to give me around that. again, maybe $900 at the least.
as to wanting to start off that way, i dont know, SO many people do it. the few houses within a mile of where i live there a bunch of houses that have illegal apartments. and i have lived in two of them, so i know that they exist and people do it
It sounds like you're going at this backwards.
If you apply your method to, say, buying shoes, you could say, "Well, my best friend bought a pair of shoes for $300. So I can expect to pay $300 for the next shoes I want to buy."
Think of all the "it depends on ..." scenarios you would apply to buying shoes, and do the same kind of inquiry when thinking about buying a house.
Be sure you can afford it outright, by yourself WITHOUT a BF and WITHOUT rent.
Should i find out how much i qualify for? my credit score is good, i have no debt and i have a lot of cash in the bank, so i would have the 20% down payment for anything $400k or less.
A lot of the towns near where i live have illegal apartments in them, so it would most likely be an illegal rental.
An acquaintance of ours thought having an illegal rental was easy money. Until it became extremely expensive. You see, the last renter stopped paying rent and when she threatened to take him to court, he notified the building inspector.
Daily fines until she ripped out the kitchen which she couldn't do until the renter moved out.
But the renter refused to move out and housing court said "no jurisdiction" so she was left being unable to evict, legal fees, construction costs, AND owing a tremendous amount in fines.
Plus, if you are depending on the $1000 from boyfriend and $1000 from illegal apartment rent, what happens when/if:
1. Boyfriend loses job OR you are no longer a couple;
and/or
2. Renter moves out and leaves a mess making it so you can't rent right away or simply stops paying rent for whatever reason? You have an illegal apt making it so you can't evict and have now lost that income.
Don't do it this way. Buy with a legal apt, have enough to cover 6 months of no income from apt AND 6 months of no income from whatever roommate you may have. Or buy a SFH you can afford on your own without depending on someone else.
BTW, you have to include insurance in your monthly expenses so it is: mortgage, taxes, AND insurance.
And don't forget to add in maintenance costs: new hot water heater; new furnace, plumbing repairs, etc.
If you apply your method to, say, buying shoes, you could say, "Well, my best friend bought a pair of shoes for $300. So I can expect to pay $300 for the next shoes I want to buy."
Think of all the "it depends on ..." scenarios you would apply to buying shoes, and do the same kind of inquiry when thinking about buying a house.
Be sure you can afford it outright, by yourself WITHOUT a BF and WITHOUT rent.
but if it's the same brand of shoes, then yes, i can expect to pay $300... if my friend buys louis vuitton shoes but i buy skechers, then no.
so if i rented a 1 bedroom basement apartment for $1150 from a landlord, i can expect to rent out to a tenant a similar basement apartment for $1150.
i DO agree with your last statement of being able to afford it myself though. should i just go to a bank and see what i can and cannot afford and go from there?
An acquaintance of ours thought having an illegal rental was easy money. Until it became extremely expensive. You see, the last renter stopped paying rent and when she threatened to take him to court, he notified the building inspector.
Daily fines until she ripped out the kitchen which she couldn't do until the renter moved out.
But the renter refused to move out and housing court said "no jurisdiction" so she was left being unable to evict, legal fees, construction costs, AND owing a tremendous amount in fines.
Plus, if you are depending on the $1000 from boyfriend and $1000 from illegal apartment rent, what happens when/if:
1. Boyfriend loses job OR you are no longer a couple;
and/or
2. Renter moves out and leaves a mess making it so you can't rent right away or simply stops paying rent for whatever reason? You have an illegal apt making it so you can't evict and have now lost that income.
Don't do it this way. Buy with a legal apt, have enough to cover 6 months of no income from apt AND 6 months of no income from whatever roommate you may have. Or buy a SFH you can afford on your own without depending on someone else.
BTW, you have to include insurance in your monthly expenses so it is: mortgage, taxes, AND insurance.
And don't forget to add in maintenance costs: new hot water heater; new furnace, plumbing repairs, etc.
yeah, i hear you, i know that it's risky.
UGH, i have been saving and saving and saving! and yet i still feel i cannot buy a house on my own
UGH, i have been saving and saving and saving! and yet i still feel i cannot buy a house on my own
This is the core issue: Buyers have "desired areas," and the more people who desire to live there drives up the price of homes. So if you want to buy a house in an expensive area like LI, you have to make choices: save up "enough," get a roommate, choose a slightly less desirable area, etc.
Smart people will be PATIENT and educate themselves about the process.
Study up on mortgages, real estate and economics in general and continue to save. DO NOT try shortcuts like illegal rentals.
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