Rental property

[Ky hills]

Have recently, been thinking about a venture into some more rental property. We have a couple houses here in the land that we are renting out, but have heard from someone that is investing in houses and from what they say it evidently can be fairly profitable. They are using a business model something to the effect of buying a house and renovating it, renting it and using the equity to acquire another house and letting the rent make the payments. Does that sound like a wise investment?

 

[TennesseeTuxedo]

Have recently, been thinking about a venture into some more rental property. We have a couple houses here in the land that we are renting out, but have heard from someone that is investing in houses and from what they say it evidently can be fairly profitable. They are using a business model something to the effect of buying a house and renovating it, renting it and using the equity to acquire another house and letting the rent make the payments. Does that sound like a wise investment?

That's part of what I do Bill. I also flip a fair number of homes a year.

 

[JMJ Farms]

Works for me

 

[pricefarm]

I have 5 houses right now. What you are talking about it what they call the BRR method (buy rehab refinance) I haven't done any of that but have thought about it. I have been just saving up untill I get enough to put 20% down and enough to make repairs then buy one.

 

[pricefarm]

So when y'all refinance do the banks only give you 80% of the appraised value?

 

[TennesseeTuxedo]

So when y'all refinance do the banks only give you 80% of the appraised value?

Yes, sometimes 75%.

 

[pricefarm]

So when y'all refinance do the banks only give you 80% of the appraised value?

Yes, sometimes 75%.

How long do you wait before you refinance it ? Does banks make you wait a certain amount of time?

 

[JMJ Farms]

Most banks around here only want to loan 75-80% of purchase price or appraised value, whichever is lower. One tool is to get the appraisal done "subject to" repairs and completion. That way if purchase price is $30k and repairs are $30k you can usually get the bank to loan close to the entire amount. I'd rather use their money than mine most of the time. I also have a long term relationship with them so that helps me. It used to be a struggle to continually come up with 20% every time I wanted to buy something. There's usually a one year wait period between purchase and refinance on a mortgage. But on rental property I don't think you have to wait. If you can come up with the 20% then you can get your money back out by refinancing within a few weeks to a couple of months.

 

[TennesseeTuxedo]

Most banks around here only want to loan 75-80% of purchase price or appraised value, whichever is lower. One tool is to get the appraisal done "subject to" repairs and completion. That way if purchase price is $30k and repairs are $30k you can usually get the bank to loan close to the entire amount. I'd rather use their money than mine most of the time. I also have a long term relationship with them so that helps me. It used to be a struggle to continually come up with 20% every time I wanted to buy something. There's usually a one year wait period between purchase and refinance on a mortgage. But on rental property I don't think you have to wait. If you can come up with the 20% then you can get your money back out by refinancing within a few weeks to a couple of months.

Very good explanation.

 

[Rafter S]

Have recently, been thinking about a venture into some more rental property. We have a couple houses here in the land that we are renting out, but have heard from someone that is investing in houses and from what they say it evidently can be fairly profitable. They are using a business model something to the effect of buying a house and renovating it, renting it and using the equity to acquire another house and letting the rent make the payments. Does that sound like a wise investment?

Don't forget to factor risk into your equation. What happens if they stop paying rent? Can you still make the payments?

 

[greggy]

There are people here buying and renting out and flipping, at some point, you have to wonder how long this can go on due to rates and economies worldwide.

I think it is risky to go in now and keep leveraging, anywhere that rates are very low, if you been doing it since 80's or you have cash you want a return on, that is different.

If you put everything on black, and large % of everything is borrowed, you may loose your underwear.

 

[Chevy]

Hold up wait a minute... let me get this straight... ya'll get like 5+ or however many home loans?
Say you buy them around 20-50,000 in a decent neighborhood. Make it look like a 100,000 get a $75,000 loan.... what do you do with $375,000 a year?! No job.... I seriously may have over figured but just saying. So if you did pass before the loans are re payed you died with $375,000 more than you have and 5 house loans.... or if the renters don't pay you just don't pay 5 houses loans.
Thats stressing me out thinking about it...I just chewed all my fingernails and toenails off.
Maybe I'm wrong but if you don't have the money you don't need it. Better save until you have the money.

 

[greggy]

It is leveraging.

Works well in growth or boom times, it has opposite effect if poor timed.

It all comes down too deposit, income and outgoings allowing for some movement.

Anyone fully aware of cattle or farm finances prob has a grip, it is the get rich quick with no exp that often get burned.

Just like all business, just have to have eyes wide open.

Down here, prob some are hurting, corona meant the gov told a lot of renters they did not need too pay landlords, or could defer, etc....or they did shutdowns, imagine you just bought some commercial property and the gov dismissed your renters from having too pay......eeeeekkkkk

 

[chaded]

Hold up wait a minute... let me get this straight... ya'll get like 5+ or however many home loans?
Say you buy them around 20-50,000 in a decent neighborhood. Make it look like a 100,000 get a $75,000 loan.... what do you do with $375,000 a year?! No job.... I seriously may have over figured but just saying. So if you did pass before the loans are re payed you died with $375,000 more than you have and 5 house loans.... or if the renters don't pay you just don't pay 5 houses loans.
Thats stressing me out thinking about it...I just chewed all my fingernails and toenails off.
Maybe I'm wrong but if you don't have the money you don't need it. Better save until you have the money.

Of course everyone has their own opinions but I agree with you. For me, investing in rentals is something to do when I have the cash the invest. Taking out a loan means I have no business messing with it. But, I have become allergic to debt and bankers and interest and ......

 

[TennesseeTuxedo]

Money is a tool just like any other, in the right hands it works wonders, in the wrong hands not so much.

 

[Buck Randall]

Hold up wait a minute... let me get this straight... ya'll get like 5+ or however many home loans?
Say you buy them around 20-50,000 in a decent neighborhood. Make it look like a 100,000 get a $75,000 loan.... what do you do with $375,000 a year?! No job.... I seriously may have over figured but just saying. So if you did pass before the loans are re payed you died with $375,000 more than you have and 5 house loans.... or if the renters don't pay you just don't pay 5 houses loans.
Thats stressing me out thinking about it...I just chewed all my fingernails and toenails off.
Maybe I'm wrong but if you don't have the money you don't need it. Better save until you have the money.

Where can you buy houses in decent neighborhoods for 20-50,000? It takes that much to buy an empty lot in Wisconsin. 100,000 will buy a really small, run down house in the middle of nowhere.

Don't stress about owing more than you have in assets when you die. The bank will find a way to get by. :lol2:

 

[herofan]

Hold up wait a minute... let me get this straight... ya'll get like 5+ or however many home loans?
Say you buy them around 20-50,000 in a decent neighborhood. Make it look like a 100,000 get a $75,000 loan.... what do you do with $375,000 a year?! No job.... I seriously may have over figured but just saying. So if you did pass before the loans are re payed you died with $375,000 more than you have and 5 house loans.... or if the renters don't pay you just don't pay 5 houses loans.
Thats stressing me out thinking about it...I just chewed all my fingernails and toenails off.
Maybe I'm wrong but if you don't have the money you don't need it. Better save until you have the money.

Of course everyone has their own opinions but I agree with you. For me, investing in rentals is something to do when I have the cash the invest. Taking out a loan means I have no business messing with it. But, I have become allergic to debt and bankers and interest and ......

I'm allergic to debt too, and never regretted it.

 

[Chevy]

Hold up wait a minute... let me get this straight... ya'll get like 5+ or however many home loans?
Say you buy them around 20-50,000 in a decent neighborhood. Make it look like a 100,000 get a $75,000 loan.... what do you do with $375,000 a year?! No job.... I seriously may have over figured but just saying. So if you did pass before the loans are re payed you died with $375,000 more than you have and 5 house loans.... or if the renters don't pay you just don't pay 5 houses loans.
Thats stressing me out thinking about it...I just chewed all my fingernails and toenails off.
Maybe I'm wrong but if you don't have the money you don't need it. Better save until you have the money.

Where can you buy houses in decent neighborhoods for 20-50,000? It takes that much to buy an empty lot in Wisconsin. 100,000 will buy a really small, run down house in the middle of nowhere.

Don't stress about owing more than you have in assets when you die. The bank will find a way to get by. :lol2:

This is true. I live in the real nice "s@#$hole" call Kentucky aka "Stucky." No offense to anybody who actually loves it here. Its not all that bad lots of methheads, drug addicts, nothing to do, and mostly the weather sucks. Besides that not a bad a place to live. Everybody seems to get stuck in Kentucky "Stucky".
Look up S@$&hole town Rainmakers on YouTube. I think they wrote that song about here. Awe thats wrong.

In all seriousness, the main thing around here is location "in town" for rental houses. Most people that rent here don't want to have to drive from the sticks. Unless you had a house thats close to one the bridge jobs or something thats going on. You could easily rent to construction workers.

 

[Chevy]

This is a house we purchased... any nobody want to guess how much?

https://youtu.be/z5u1cVJ30z8

 

[littletom]

I have thought about it. But the drama of wheres my rent and drain stopped up has me head scratching. Neighbor has 40 units and works well, but alot are paid by us and uncle sam.