Never involve relatives into your investments. I would rather deal with and pay a professional management company than to have my relatives do it. Even if it was cheaper, it is better being upset with a crappy management company than to be upset with relatives. Atleast you won’t feel bad taking a stranger to court than you own sister.
Wow, lots of info…thank you all so much. I have lots of reading and driving to do!!! We have been contimplating this business adventure for about 10 years. Got Carlton’s program about that long ago too!! But are serious about making a go of it now. Anyone know if you can get updates to Carltons programs? We have also been reading alot of Richdad stuff (Robert Kiosaki).
Off to the races…
Thanks again!!
I am in the KC metro as well, and I am personally thinking about homes in Northern Overland Park that are older and need remodel. I don’t want to rent, I want to rehab. They take good care of the homes overall but are dated and need some repair because the population is getting older. You may be able to find a hidden gem if you look hard. Shawnee may have cheaper properties because they are older but you may make some money because of the Johnson County inflated costs. I hope I am right, that you may find some dirty, or junky houses where the owners need to get out fast and will sell cheap. Then you are in a desirable neighborhood with a cheap mortgage. Just about any neighborhood in Johnson county is considred desirable, but some in Northern OP are looking pretty run down to me. If you can get a house say under 120,000 in Johnson county at all you know you can get top dollar rent if you can do some updating and painting. All you have to do is market it as JOHNSON county and people come running. If it looks nice and is a pretty fair rent, you will have no problem getting renters here.
Rental Properties are very hard to come by up here in the Sioux City, Iowa region. I am looking and looking and looking but cant find anything that i think will make me any money. The cheapest i can find is about a $50,000 house but by the time you figure taxes, insurance, and P&I your only making about $50-$100 a month which it is worth it if you have good tennants that pay on time, and you dont run into problems with the house that does make the profit go down hill. But also you have to look at the tax breaks that you are getting. Figure in your interest, repairs, and new Vehicle, dinner and entertainment expenses, gas and ect, then you will be getting a nice check back from uncle sam. 
Most people forget about this part, plus the appreciation your geting from your house.
“But also you have to look at the tax breaks that you are getting.”
Tax breaks on something you would be paying no taxes on if you didn’t own it…so instead of paying $1 your only paying 50 cents. Your still paying. Just mail me $1 and I’ll mail you back 50 cents 
IMO taxes alone are a bad reason to buy a property, and $100 a month is not nearly enough.
But your still building equity into it. If your rent payment is $550 and your payment is $450 after p&i, taxes and insurance the renters are making the payment and giving you $100 per month. Therefore your making money and not losing any (Unless there are repairs or unocupied months). The way that i understand it, is if you rent out your house, you get to write off the whole entire payment (Could be wrong on this, but its what ive been told), Plus your gaining equity of between 3-8% if not more per year as your value rises. It sure seems to me that it would be worth it to try for about 5 years and then sell if you dont like renting and pocket all of the equity. JMO but i am no expert and ive only been doing this for abot 3 months.
Have any of you joined any of the Real Estate Investing Associations in your area? Are they worth checking out???
Thanks for all the input!!
Black95gt-
You are right about the equity and the renters paying the mortgage. But is it worth involving relatives, being a long distance landlord and all for a mere $100 bucks a month? I didn’t think so.
I agree with MarkW; you are fooling yourself if you think you are making money by “saving on taxes”.
As an example on travel/meals, you can only deduct 50% and if the are in the 35% Fed Tax Bracket that means you get 17.5% back. On a $50 meal, that a meager $8.75 which amts. nothing more than a discout (I have coupons on my refrig for more than that).
In terms of mileage, sure you can write it off at 40cent /mile (or whatever it is this year), but this “tax saving” is a 35% of 40cents/mile (or about 15cents). With gas at $2.5 per gal and my '91 Explorer getting 18mpg with a tailwind, downhill, it does not even cover the cost of my gas let along all the other stuff.
What about the interest deduction though?
If the first year you pay about 300/month in interest, thats 3600 for the year. For a 35% bracket thats roughly 1200 tax savings. Could that number be counted in your annual cash flow?
An agent was using this logic at my investor’s club meeting last night. He is selling pre-construction condos and stated that you’ll get about 50% of the mortgage back in rent but that the tax savings will more than make up for it. I didnt bother to ask him for his card. 50% negative on a 400k property. Not for me.
“If the first year you pay about 300/month in interest, thats 3600 for the year. For a 35% bracket thats roughly 1200 tax savings.”
So I understand this correctly…
You pay $3600, to save $1200…so you really end up paying $2400 instead. Don’t buy the house, send me $3600, and I will send you back $1200. That should have 0 to do with buying a property or not. Its a nice bonus since you have to pay it if you do buy it, but not a reason to make the purchase.
there is no interest deduction on rental; basically the interest you pay is listed on SchE as an expense aginst the income (rent) you received. Normally when you bring it all to the bottomline including Amort of lender fees and decprec., you show a loss which is then deducted form your taxable income.
HOWEVER, this loss is limited to $25k per year if you are married and your Agg. Gross Inc is above $100k, the max. amount is phased out at $150k. The loss is “suspended” and cam only be taken when you sell the property or you have a low year of income.
This does not apply if your primary source of income is real estate investing.
Therefore, it is difficult to judge the tax ramifications in terms of what kind of benefit (if any) you will get in any given year. Therefore, I usually disregard this part in my analysis of any deal since many times the losses uend up being suspended for me.