I am 19 years old from kansas and am looking to purchase my 2nd house (first one is a personal home).
Aprasial Value: 210,000
Purchase Price: 185,000
Monthly rent: $1650, renter pays utilities, Year lease up end of June
No association fees
Bank loan 100,000 @6.75
Personal Loan 85,000 @ 6
Any comments would be great thanks
How many years is the personal loan amortized over?
The bank and personal are for 30 years- fixed rate
What is your plan for the house? It sounds like you want to rent it, but at that price your cash flow is going to be really negative. General rule of thumb around here seems to be that you want 1000 in monthly rent for each 50k of the puchase price.
ex- house rents for 2000 a month. It’s a good buy for under 100k
house rents for 1650 a month. It’s a good buy for under 82,500.
My advice- Keep looking.
Negative cashflow all the way…
Wow because here in kansas there is no way in hell you’d be able to get 1650 for a house that you could get for 82500 unless you held them at gunpoint.
How do you get the houses so cheap?
Wow because here in kansas there is no way in hell you'd be able to get 1650 for a house that you could get for 82500 unless you held them at gunpoint.
How do you get the houses so cheap?
I hear that all the time, even here in Ohio. The problem is usually that the person hasn’t really done anything to find a great deal. What have YOU done to find a great deal?
Hello everyone. I am also looking to get into long term rental property investment. I have read several times on this forum that the rule of thumb for obtaining positive cash flow properties is $1000 rent per $50k purchase price. However, I don’t have the foggiest idea how anyone can find properties priced this low that will produce rents that high. That seems like an impossible task. However, if some of you are doing it, then it must be possible. But is that truly the break even point? Is that a bare minimum requirement for positive cash flow? Is that a requirement that pretty much just applies to any and all markets…and the trick is to find markets where you can still find properties that will sell within those guidelines? Is that based on the sale price or the loan amount? What if I put more money down?
The 2% “rule” that you’re speaking of simply says that for a property to cash flow it needs to have monthly gross rents of about 2% of the acquisition cost (purchase price + rehab cost). The math is the same regardless of where you live. Obviously, some areas of the country have home prices that are significantly overpriced. These are the bubble areas such as California, Las Vegas, Florida, etc. If you live in such an area, then starting a rental property business will be difficult at best and may not be the best idea. Keep in mind that real estate investing is not the be-all and end-all of the earth. It is simply one business out of the thousands of possible businesses you could start. Pick one that will make money where you live.
Having said all that, most newbies here in Ohio are under the same impression as you - that it is nearly impossible to buy properties at the proper discount. In fact, the vast majority of newbies pay retail (or close to it) and are rapidly driven out of business when they realize they are bleeding cash each month. Most of these people do nothing more to find a rental than contacting a real estate agent and looking at properties that are on the MLS. Unfortunately, that is usually not enough. To find the great deals, you’ve got to get out of the house and meet people. Join your local REIA and meet the SUCCESSFUL investors in your area. You would be amazed at the number of great deals you will get just by knowing the right people. Then, tell everyone you know that you buy houses at a discount.
Putting more money down doesn’t change the quality of the deal. Yes, you can BUY cash flow by putting more money down, but that downpayment also comes at a cost, in the form of lost interest and lost opportunity.