About Renting
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About Renting (by Cable [AR]) May 29, 2012 9:23 PM
       About Renting (by Reid [KS]) May 29, 2012 9:47 PM
       About Renting (by Beth [KS]) May 30, 2012 3:42 AM
       About Renting (by S i d [MO]) May 30, 2012 4:35 AM
       About Renting (by NE [PA]) May 30, 2012 5:02 AM
       About Renting (by V [OH]) May 30, 2012 6:15 AM
       About Renting (by Phil [OR]) May 30, 2012 7:05 AM
       About Renting (by Sue [MI]) May 30, 2012 7:34 AM
       About Renting (by Sue [MI]) May 30, 2012 7:34 AM
       About Renting (by Sue [MI]) May 30, 2012 7:35 AM
       About Renting (by Steve [TN]) May 30, 2012 7:55 AM
       About Renting (by Quackers [AR]) May 30, 2012 9:13 AM
       About Renting (by Sparta [OR]) May 30, 2012 9:15 AM
       About Renting (by Nicole [PA]) May 30, 2012 11:11 AM
       About Renting (by Sue [MI]) May 30, 2012 1:14 PM
       About Renting (by p m h [TX]) May 30, 2012 2:48 PM
       About Renting (by Cable [AR]) May 30, 2012 6:05 PM
       About Renting (by BRAD 20,000 [IN]) May 31, 2012 11:26 PM


About Renting (by Cable [AR]) Posted on: May 29, 2012 9:23 PM
Message:

State Specific Question About: ARKANSAS (AR)

Hello. I have a couple of questions about buying and renting out properties, specifically duplexes. I have been reading on the internet about people having 4 or 5 or sometimes many more properties that they are renting out. How do people do this? Don't they have to take out loans for 6 figures to even get a place to begin with? Then those loans take a long time to pay off also. For example, someone buys a 200,000 dollar house and gets a loan for it. They pay it off for 20 years and it is the most expensive thing they are paying for monthly. How do they do that several more times while still owning on the first one?

My second question is how much money are people making doing this? If you had around 5-10 properties bringing in 500-1000 dollars per month, is that a way to get rich or are people getting rich from the value of the properties themselves i.e. they own 10 properties worth 100,000 each, so they are a millionaire.

--99.191.xxx.xxx




About Renting (by Reid [KS]) Posted on: May 29, 2012 9:47 PM
Message:

If you are in debt 1 million dollars I wouldn't call that being a millionaire.

In Arkansas you should be able to save up and pay cash for your first rental. Going out and getting into debt makes me think that maybe your are a congressman //(LOL)

Go to www.daveramsey.com study what he has to say and then there is a book available on this site called,"Perpetual Income, How to generate cash Flow from Low-end House investments" By Bryan c Wittenmyer also "Making Money with Mobile Homes "by Lonnie Scruggs --108.236.xx.xxx




About Renting (by Beth [KS]) Posted on: May 30, 2012 3:42 AM
Message:

I'm with the others. Getting a bunch of debt is NOT the way to do this thing. Buy really cheap and try to buy with cash, maybe a small home equity loan against your house, or something like that. You MUST make sure you can cash flow which means the rents MUST be more than your taxes, insurance, other expenses. Some people say have a $100 cushion, but I would never be comfortable with that.

Reid's suggestion for the book Perpetual Income is great. Also the mobile home one sounds even better for you. Lots of mobiles in your area I'm sure you could get cheap. Great way to get started. I have no mobiles yet but hope to buy Lonnie Scrugs' book...does he sound like a mobile home investor or what??? --174.70.xxx.xx




About Renting (by S i d [MO]) Posted on: May 30, 2012 4:35 AM
Message:

A person gets rich with CASH FLOW! I don't care if you have $100 million in appraised property value: if you don't have cash flow you are going bankrupt!

Properties all have ongoing expenses: taxes, insurance, maintenance, advertizing, etc. If all of your combined rents are $1 shy of covering all of these expenses, you are getting $1 poorer every month.

Debt is not your friend. There are some on this site who will SWEAR on their grand mother's grave that going into debt has made them rich. They got lucky. If their crystal ball wouldn't missed something, they could've got belly up and would be renters themselves, if any land lord would take them with a 450 credit score and multiple foreclosures.

Start small. Save up $5,000 - $10,000 by working extra jobs, selling stuff, stashing away extra cash from your day job. Research 50 properties in your area that are considered "fixers" (i.e. they need WORK). There won't be much competition from other buyers usually because these won't qualify for loans, so only other cash investors like yourself will be interested and able to make the deal. Write offers on 10 of them. Expect that most or all of your offers will be ignored. No biggie...you're out the cost of 10 pieces of paper (or just time if you called/emailed). Write 10 more offers on the same or different properties. Repeat until you get one.

Then either sell that home to another investor, or rehab it and rent it out. Caution about rehab: it always costs MORE than you estimate, so build in plenty of wiggle room (30-40% overestimate, since you're new). Then rent it out. Calculate your numbers to where you will earn at least several hundred dollars a month AFTER all expenses are paid (taxes, insurance, maint, advertizing). That's your "salary" and your time is much to valuable to be free or paid by "appreciation". Appreciation is nice, but basically it's a wash since prices of everything else is usually going up too. You can substitute the word "inflation" for appreciation and see how much you want to be paid in inflation.

Then you do the same deal all over again until you have achieved your inome goals. What are those goals? Do you want to make $10,000 extra a year? How about every month? How about every week? You will make exactly as muc money doing this as you want. It is not easy. It is not for the feint of heart. You are not in the building business. You are in the people business managing tenants, buyers, sellers, contractors, agents, etc.

Again, debt is not your friend. Debt makes you a slave/servant to whomever loaned you that money. I would never again put my personal residence at risk with an equity loan. I did that once, and even though it worked out, I was lucky. Lucky means I gambled. Gambling isn't a good way to get rich. --108.250.xxx.xxx




About Renting (by NE [PA]) Posted on: May 30, 2012 5:02 AM
Message:

Some say debt, some say no debt. It's up to you. debt is ok as long as it is treated with EXTREME RESPECT!!

My first deal was bought and fixed with debt.

$20,000 house with $7,500 in rehab.

It now rents for $745.00 per month, you do you math.

All I know is that, I would have never bought that if I worked to save the money!!

I am not good at saving money, bottom line.

I would never have saved up 20 grand cash.

BUT

I am good at putting deals together and finding ways the get the BILL PAID!

You need to know yourself and what you are after.

I minimize personal debt, but I do use debt for real estate. --74.47.xx.xxx




About Renting (by V [OH]) Posted on: May 30, 2012 6:15 AM
Message:

The previous posters have forgotten to mention sweat equity which is why many places fall into the hands of the lenders and then the thieves who removed much of the inner workings requiring replacement items that add up quickly, if you have skills in the trades you can do much of this and survive, to hire out requires a payment method. --68.76.xxx.xxx




About Renting (by Phil [OR]) Posted on: May 30, 2012 7:05 AM
Message:

It would be nice to not have debt-- but if you are going to become a LL in my area-- I doubt it if most could do it without debt. Vacant lots in not to great of an area are going for 45K at the low end-- and up to 185K for "desirable" -- this is not acreage-- just a lot.

Managed debt can be your friend-- you have to look at it as abusiness-- and you have to have some cash of your own to put into it yourself. In my mind- the key is to know the market for rentals-- and then you need to make sure that the monthly rent will pay for the ; principle & Interest on the loan, plus Taxes, plus insurance, plus maintenance (you have to know a little about building trade to estimate this well), plus a vacancy rate, plus a management fee, and a return on your investment(down payment). Time is your friend when you do this--- it is not a get rich quick- but you eventually will own the property and have a good cash flow. If you are going to follow this idea--NEVER use an ARM-- only get a fixed interest rate mortgage ( expecially now with interest rates so low)

Best place to start? Buy your own home-- you will be the best tenant that you will ever have. Use the above factors when buying your own place and put the "management fee" towards saving for your next. Learn to budget by running your own home as a business prior to going any farther.

--98.232.xxx.xx




About Renting (by Sue [MI]) Posted on: May 30, 2012 7:34 AM
Message:

Maybe we did it wrong but we put 25% down in cash and got a loan for the rest. We figured we are buying at the low end of the market last year. We have long-term old lady tenants in there and it seems to be working out great so far. We bought our second about 6 months after the first, also with 25% down (a great credit score is a must)and took another loan. We have long-term tenants in one side and the other side is iffy. I figure 3 out of 4 are long-term tenants and take good care of the property. That was a biggie for us. We should be able to pull $900 out of them both each month (after principal, interest, taxes and insurance) if they stay full so we can pay down our debt a lot faster. I don't know if this was smart but it's the way we choose to do it - we're newbies but we hope we thought things through well. Debt? Not my favorite thing but if we wanted to get into the market that's what we needed to do. We weren't interested in low-end housing - we wanted duplexes in nice areas to attract nice tenants. --75.51.xxx.x




About Renting (by Sue [MI]) Posted on: May 30, 2012 7:34 AM
Message:

Maybe we did it wrong but we put 25% down in cash and got a loan for the rest. We figured we are buying at the low end of the market last year. We have long-term old lady tenants in there and it seems to be working out great so far. We bought our second about 6 months after the first, also with 25% down (a great credit score is a must)and took another loan. We have long-term tenants in one side and the other side is iffy. I figure 3 out of 4 are long-term tenants and take good care of the property. That was a biggie for us. We should be able to pull $900 out of them both each month (after principal, interest, taxes and insurance) if they stay full so we can pay down our debt a lot faster. I don't know if this was smart but it's the way we choose to do it - we're newbies but we hope we thought things through well. Debt? Not my favorite thing but if we wanted to get into the market that's what we needed to do. We weren't interested in low-end housing - we wanted duplexes in nice areas to attract nice tenants. --75.51.xxx.x




About Renting (by Sue [MI]) Posted on: May 30, 2012 7:35 AM
Message:

Whoops, doubled down - sorry.

--75.51.xxx.x




About Renting (by Steve [TN]) Posted on: May 30, 2012 7:55 AM
Message:

Try this: Buy a duplex. Finance if needed. Live in one side for a couple of years. During those years, save the rent money for a downpayment on the next one. Buy another duplex. Finance if needed (you already have a downpayment!) Live in one side for a couple of years. Save the rent money for a downpayment on the next one. Repeat as needed. Retire wealthy. --216.79.xx.xx




About Renting (by Quackers [AR]) Posted on: May 30, 2012 9:13 AM
Message:

Cable, Arkansas has an active state landlords association. You might want to see if there is a chapter near you. I'm in Little Rock.

www dot arkansaslandlords dot org --68.51.xx.xxx




About Renting (by Sparta [OR]) Posted on: May 30, 2012 9:15 AM
Message:

The way I got into being a LL was by not selling the house I was living in and then buying another one. At the time my PITI was lower than the rent I could charge. I was very naive and blundered into it. We were on the upswing in the 90's and it worked out. Then another one happened the same way only the PITI was WAY lower and I made money on it. When we got serious we bought another in cash and went from there. Then the crash happened, and I can tell you with 100% certainty that you will not make money on the value of the homes. You will have costs to the LL business that you never thought possible. If you are unfortunate and get a professional renter who targets you, you better have a large pile of cash you can use to defend yourself. Even if you clear $300+ per mo on a rental, don't think you can go spend it. Appliances, roofs, paint, flooring, windows, bathrooms, kitchens- they all will happen at some point. If you finance, make sure you have enough room in your mo income to stash some cash. What ever you think the value of your rental is, discount it by 20%. Plan your exit strategy when you buy your first one. --69.59.xxx.xxx




About Renting (by Nicole [PA]) Posted on: May 30, 2012 11:11 AM
Message:

to Sue in MI - be sure to keep good reserves. A few years ago I was making money hand over fist so I rapidly paid down my mortgage balances. I didn't put back enough for the unexpected and went through some tough times to get back on my feet. I had a lot of equity in a lot of properties but my cash flow was way down. If you want to pay down, pay one down at a time - I did it evenly on each property.

As for the mobile home book/guy, I bought that years ago and while on paper it sounds good, check your area. In my area, parks don't allow rentals - the park owners are the ones who get to keep the cycle going of buying, reselling, geting it back and starting over again. --72.95.xx.xxx




About Renting (by Sue [MI]) Posted on: May 30, 2012 1:14 PM
Message:

Thanks for the advice. Right now we have $10,000 put away for emergencies. We figure anything over $5,000 we would pay down balances with once a year in December. Does that sound OK or should we reserve more. Thanks for all the good advice. --75.51.xxx.x




About Renting (by p m h [TX]) Posted on: May 30, 2012 2:48 PM
Message:

Sue, those who decry any type of debt are probably those who got in trouble at some point and so try and disuade others from starting out. right now rates are so low, even on investment properties that it would be short sighted to take years to save up $$ to buy a property 100% cash. when you can borrow at 5-6% for a rental, and flow it at 25-30 r.o.i. then that is how you make $$. sure at some point you will be rich enough to pay all cash. but why wait to start. borrow and buy a duplex and start your wealth building now. do you have a 401k ? borrow against it, and pay yourself back the interest. I started out by borrowing $50k from my 401k years ago. bought some land, sold it 5 years later for 5x what I paid for it. used that to pay of my old house and down payments on rentals. manage your debt and it can turbo charge your returns. --97.94.xxx.xxx




About Renting (by Cable [AR]) Posted on: May 30, 2012 6:05 PM
Message:

So the smart thing to do would be to just buy a duplex and pay it off, then move out of that into another place and use your job salary to pay the 2nd place off while your tenants pay off the 1st one? Also, how many people who have these rental properties are actually able to rent them out? Is it a high percentage? --108.86.xx.xxx




About Renting (by BRAD 20,000 [IN]) Posted on: May 31, 2012 11:26 PM
Message:

Cable, 35 years experience here, retired at 41.

Debt is NEVER your friend. It is a siren song luring you into slavery. People just get used to the slavery until the market takes a dip and they go belly up.

There is no such things as "good debt". Bible says the borrower is SLAVE to the lender. Anyone with experience will back this up with real life examples.

You can buy houses cash, or leverage with little to zero down, on contract or with a fellow investor as a financial partner. NEVER believe the bank is a "partner". They are all smiles when you sign the papers and but turn on a dime and want their money if things get tight. They take the whole property and sue you for the difference.

Building a business on debt is building on sand. Build your house on rock.

My advice to my 20 something kids, find some deals, wholesales them to guys like me and put a few thousand$$ in their pocket each time. Do this several times and you'll have enough to pay cash for the first small house.

--50.129.xxx.xxx





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