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I would love some advice: I cannot qualify for a home loan to purchase a home within 50 + miles of where my business is located, unless I'm willing to move the family into a crime filled neighborhood. Unfortunately, I started my business here 10 years ago without thinking about the reality that homes are extremely expensive here and my humble business doesn't bring in the kind of income required to buy a house in one of the "safe" neighborhoods within reasonable daily driving distance to my work.
So, my question is: should I instead purchase a property anywhere from 100 to 500 miles away from my work, at a very reasonable price, and keep renting a house/apartment for my family near my business until I can retire or start a new business online, and move away from here into the investment property instead? I pay about $2500 a month in rent here, but I can qualify for a mortgage for a nice home way out of this area for a decent monthly payment of around $500-$700 per month. I have the extra cash to make that monthly mortgage payment (plus taxes, insurance, etc.) every month, and I'm feeling I want to own something, and maybe I would even rent the vacation house out through Airbnb or something in the meantime, and make some income to help pay the mortgage.
Do you think this is a good idea? Would love to hear your pro's and Con's about it. Thanks!
I started my business here 10 years ago without thinking about the reality that homes are extremely expensive
here and my humble business doesn't bring in the kind of income required to buy a house in one of the "safe"
neighborhoods within reasonable daily driving distance to my work.
So, my question is: should I...
If the business is viable... move it or sell it.
Start again somewhere that you can afford to live.
Being a landlord as your first foray into property ownership isn't the wisest idea IMO. And being a long distance landlord as your first stab at ownership? An even worse idea. Even experienced landlords can get burned with a long distance situation.
I would love some advice: I cannot qualify for a home loan to purchase a home within 50 + miles of where my business is located, unless I'm willing to move the family into a crime filled neighborhood. Unfortunately, I started my business here 10 years ago without thinking about the reality that homes are extremely expensive here and my humble business doesn't bring in the kind of income required to buy a house in one of the "safe" neighborhoods within reasonable daily driving distance to my work.
So, my question is: should I instead purchase a property anywhere from 100 to 500 miles away from my work, at a very reasonable price, and keep renting a house/apartment for my family near my business until I can retire or start a new business online, and move away from here into the investment property instead? I pay about $2500 a month in rent here, but I can qualify for a mortgage for a nice home way out of this area for a decent monthly payment of around $500-$700 per month. I have the extra cash to make that monthly mortgage payment (plus taxes, insurance, etc.) every month, and I'm feeling I want to own something, and maybe I would even rent the vacation house out through Airbnb or something in the meantime, and make some income to help pay the mortgage.
Do you think this is a good idea? Would love to hear your pro's and Con's about it. Thanks!
Without specifics, the answer is: it depends.
It can certainly work for some people, but this is really an investment question - whether you can afford to buy near your work is irrelevant; the only important criteria is whether the area you are thinking of buying a rental property is worth investing in at the price that is available to you.
Without more specifics, this is impossible to answer. I wouldn't recommend buying any property in some rural job-less area; but that doesn't mean a metropolitan is worth it; it's a case by case.
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Exactly what bebop said. This is purely an investment decision. It is not at all unusual for someone to rent their residence but also be a landlord. Typically it will be someone in your situation, that is, living in a high priced area and investing somewhere more affordable.
It's not like investing in mutual funds or index funds or something safer and diversified. You must take some time to get educated and you also must do thorough due diligence before buying. After that it can be fairly passive with a good property manager.
Purchase as close to you as possible (2-hr drive seems manageable) and as long as you have found a PM you are confident in. In addition to the PM, account for regular maintenance, Capex, vacancies, taxes and insurance. At the end of all that, if you are happy with the amount of net income* you expect to receive, then go for it.
*I'd strongly recommend that number be at least $100/month, unless you are in the Bay Area or something, in which case it may make sense even with a slightly negative cash flow.
For $3.2K per month, you could probably afford a $500K+ home with taxes and insurance. 5-percent annual appreciation there would net you about $20K more per year than 2-percent on a $200K home in a more rural area. Just because you can afford a remote property, doesn't make it a good "investment," particularly when you consider vacancies, repairs, maintenance and other costs.
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