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Answers (4)
- sunnyview
- Contributions:25139
I think that carefully chosen rental property can be really good as long as you have room in the cash flow for professional management in case you ever decide that you do not want to self manage or that you need extra help for screening.
The low interest rates make long term positive cash flow property attractive, but you have to make sure that you do your homework and have a plan for management. If you can find a house and a tenant that will pay off a mortgage for you over time on a 4% mortgage, then it may make sense as part of a larger financial plan.
I would ask a local lender to run numbers for you. Most lenders I have seen ask for 25% down on rental property unless they are a homepath type mortgage I think those require less down. They also want to see reserves to pay your primary mortgage for a few months and the new investment mortgage. Run some numbers, get a handle on local rents and see if it makes sense in your area. In mine, it does right now as long as you pick the right house.
The low interest rates make long term positive cash flow property attractive, but you have to make sure that you do your homework and have a plan for management. If you can find a house and a tenant that will pay off a mortgage for you over time on a 4% mortgage, then it may make sense as part of a larger financial plan.
I would ask a local lender to run numbers for you. Most lenders I have seen ask for 25% down on rental property unless they are a homepath type mortgage I think those require less down. They also want to see reserves to pay your primary mortgage for a few months and the new investment mortgage. Run some numbers, get a handle on local rents and see if it makes sense in your area. In mine, it does right now as long as you pick the right house.
- Jandy82
- Contributions:4
Yea I guess my question wasn't very specific. I am not looking to pick up another mortgage. We would buy this house outright. In my area homes are selling for so little! The house that I'm looking at is in a good neighborhood with county taxes. It would be a great home for a small family. I know that when home values do eventually start rising it would sell for much more. This would deplete basically all of our savings but we have about 30 more years before retirement. I figure we could eventually build our savings back up and maybe make some money on the rent of the house.
- sunnyview
- Contributions:25139
You can look at a calculator like this one here to see how prepayment will affect your mortgage balance and term. Then use a savings calculator here to see how much you will have saved that way.
If you are young and your mortgage rate is low, I would probably not put all my extra money into a mortgage. You might consider making one extra payment a year instead to save interest and shorten your term, but beyond that I would choose a way to save or invest that would have more flexibility and grow over time better than a fixed mortgage rate.
Rental property can be good, but you need really solid cash flow after expenses and management to cover yourself long term. How much are houses/condo running in your area vs what the rents are?
If you are young and your mortgage rate is low, I would probably not put all my extra money into a mortgage. You might consider making one extra payment a year instead to save interest and shorten your term, but beyond that I would choose a way to save or invest that would have more flexibility and grow over time better than a fixed mortgage rate.
Rental property can be good, but you need really solid cash flow after expenses and management to cover yourself long term. How much are houses/condo running in your area vs what the rents are?
- Gary Bell, "Gary Bell"
- Contributions:45
Hi Jandy,
This is a tough question to answer without having more details. Your first step should be to talk to a local real estate professional. They can give you an idea of the rental rates for a specific area and that can help you in deciding if it is a good idea. You also have to decide if you really want to be a landlord. There is a lot of work involved and you can expect to incur maintenance expenses and vacancies.
This is a tough question to answer without having more details. Your first step should be to talk to a local real estate professional. They can give you an idea of the rental rates for a specific area and that can help you in deciding if it is a good idea. You also have to decide if you really want to be a landlord. There is a lot of work involved and you can expect to incur maintenance expenses and vacancies.
Should I buy and rent out or just pay off my home?
So as it turns out me and my husband have a little extra money to put towards something. We don't know weather to buy a new house and rent it out or just pay off our own home. What is the better move for a young couple?
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