Real Estate General
I'm starting this as a thing.
First topic I want to ask anons about is:
Buying a Duplex and renting out half while living inside the other half. I'm led to believe that if pulled off correctly I could be living in a home rent free. A man free of his parents basement and able to live the NEET stock lifestyle at this new home.
basically, this is a great investing strategy that I would like to discuss on how to effectively pull off this sort of investment.
That sounds like a solid idea.
>>1022916
Rent out both and live in a cheaper area.
>>1022916
and how many duplexes do you see for sale?
>>1022928
A decent amount in my areas, but only in the more urban areas are they popular.
It is also possible to purchase a house with an "in-law" apartment and live in that. That is the better option but they are harder to find.
>>1022916
Doesn't work in reality, anon.
Let's say your duplex is 200k with no repairs needed (optimistic). Rent in your area follows the 1% rule (optimistic) so each side rents out for 1,000. You live in one, rent out the other. With raising rates, a 30 year mortgage, property tax, and home insurance, you're paying about $1,100. You're only at a $100 loss per month.
But wait, every month your other side is vacant means a $1,000 loss for that year, so lets include the vacancy rate. Let's assume it's 5% (optimistic), so that's $50 loss more each month on average, to $150 per month.
But wait, you have to repaint the walls each time you rent to new tenants, plus repair damages, plus handle all maintenance. Let's assume that's another 3k/year, so that's another $250. Now you're averaging a cost of $400 per month.
So in total, with a $40,000 down payment and $5,000 closing fees in a fantastic housing market, you're down $400 per month on average with the risk of running into a shitty tenant who ruins the place, or is loud as fuck and knows the tenant laws so you can't evict him, or refuses to/can't pay rent and it takes months to get the eviction, or literally any usual trouble that comes with owning a home like heavy damages or foreclosure during job loss.
It's a good idea, and it can work out, but it's not a gold mine. Plus good luck getting the $45,000 to start this project in the first place; putting 5% down instead will jump these numbers up by an extra $350/month.
>>1022950
Factor in tax deduction for interest portion of both mortgages
>>1022950
Yes nice anon, these are the troubles and difficulties with this method.
Let's work though how to minimize these kinds of losses.
First of all Duplexes are 75-125k in my area, check on zillow for yourself. It's really a local problem with this one but the key to solving this is to just get a good deal on the duplex you purchase. To minimize all of these expenses.
>>1022965
If the costs to owning are less, check the rent payments as well. They're very likely less by an equal proportion.
>>1022962
It's a single mortgage for the duplex, and in the above the tax deduction would average $125 if you're in the 25% tax bracket (assumed). Good call, so now we're down to $275 on average. Again, it is a good plan, the main problem is the down payment and avoiding shitty tenants and neighborhoods.
>>1022965
you realize everything he wrote still applies, right? there's a reason why he wrote everything in percentages and only used numbers for the example case so that even retards can understand it.
rental properties are a numbers game. the profit from them is low unless you own a few and own them outright. on rental properties that have a mortgage your main gain is from building equity. however, an area with duplexes for 75-125k sounds like a shit area with little growth so equity won't do you much good.
Why would someone sell you a duplex that is making them money is the question. You're going to have to buy a piece of shit and fix it up or hustle for it or something.
>>1022980
why don't you post your zipcode? it's easy enough for us to check what the rent is and prices are. the rent you're claiming to be able to get is on the high side considering the cost of the property unless your area still has a lot of foreclosures.
Dear op
Are you the same self proclaimed NEET who had been posting stupid bull shit across /biz/ /b/ /ck/ ??? all of your threads are stupid and childish please kill yourself and do both 4 Chan and your parents a favor
>>1022980
Holy shit that's great. Anon where do you live? I want to get in on that market.
My market is like this too. Its baffeling. Youve got 100k homes renting for 1300/month. I cant wrap my mind around why all these deals havent been bought up. These are just properties on zillow that I am looking at.
>>1022998
What area, anon? Mine is 300k for a place that rents for $2,500
>>1022916
Yes, you can live there rent free, but you can't generate an income from it.
>>1022999
Well, typically the ratios get worse with more expensive homes.
>>1022998
that's how it is in my area, but that's 1.3% of the purchase price per month vs 2% that OP is claiming.
i bought a condo in 2014 for 70k that i'm currently renting for 1.3k/month, but the place had about 15k invested into renovations and the property tax is 3k a year. it's worth about 100k now since it was a foreclosure.
>>1023017
What's to stop me from buying a ton of these? If every one I buy is going to cash flow my income increases so wouldn't banks just keep lending to me as every time I buy one my debt payments become a smaller percentage of my income?
I've got the money for down payments... it seems too easy. Someone would have already done this by now.
>>1023020
People do it all the time and then mortgage rates shoot up, people lose all their shit, and then it starts anew.
>>1023020
>If every one I buy is going to cash flow my income increases so wouldn't banks just keep lending to me as every time I buy one my debt payments become a smaller percentage of my income?
they will assuming you can prove that you're getting cash flow from the property. i bought my second condo a little over a year after buying my first and the bank that gave me the second loan wanted 3 months proof of rent from the first condo.
as an aside, the second condo has been a shit deal so far. been standing empty for 4 months now losing me money, and despite being more expensive (wasn't a foreclosure) the rent for it is expected to be lower. granted it's partially on me since i wasn't as aggressive in seeking tenants.
but yeah, what you want to do is what i wanted to do. what stopped me so far is inability to find a good tenant for my second condo and until it's rented i can't even think about getting a third. i have a full time job so unfortunately i can't take calls all day and schedule showings whenever.
>>1023026
Then get fixed rate mortgages?
I read that banks will cut you off at 10 that's a rule or something. Do you think a bank would lend me money to get to 10 100k houses if I can pay 20% down and they all produce a positive cash flow?
>>1023030
I've also got a full time job and the market I'm looking to get into is a couple hours drive away so it's going to be an uphill battle. I'm just encouraged that it seems possible to do this. I know many headaches await me as a landlord but damn I'm obsessed with the possibilities.
>>1023030
What are your best avenues for getting tenants? I was thinking id be able to just put it up on the Internet.
>>1023032
You can buy one, using your income or current assets as collateral, and use the rent made off of it as proof that you can pay toward the mortgage of another.
>>1023040
craigslist and a popular local newspaper of your choosing. the papers have their own online classified ads that people use if they think craigslist is too shady.
>>1023020
ITT: Pretend it's 2007
i'd rather just get a small 2 bed house and rent out to seniors only
maybe get some help from section 8
don't think ive seen anyone mention legal risks (ie: getting sued cause they hurt themselves walking to the front door on the little sidewalk cause they slipped on the sidewalk cause it was frozen cause you didn't salt it.)
>>1023276
Avoid section 8 at all costs
If you are running a rental house is it typically in your interest to take itemized deductions or standard tax deduction?
I was thinking I would just do standard but the house is far enough away that I could save a ton of money by deducting the mileage and fuel im using. What do you guys think?
>>1023276
Personally Im just going to get a liability insurance policy. You could do an llc but I dont think its the way to go when starting out because of tax and lending reasons. Pretty sure if you are going to use banks they want to see your name on the deed and not your company. I could be wrong though things change.
>>1023089
Okay lets say you make six figures though. You could still buy like 5 100k houses and be able to pay your rent in the event that you cannot get any tenants which would be a crazy event.
Only way you go under is if you lose your job and you cant get tenants. But that would be a pretty fucked up scenario.
How do you fags get good deals? Anything associated with a realtor means you're probably going to have to pay pretty close to market value. Does anyone go door to door? I'm thinking about turning my Facebook page into a big add about how I'll buy your house but that's kind of embarrassing to me. Especially if I don't go through with it everyone will think I'm a fag.
>>1022916
currently thought of this too; i imagine there are fees and taxes associated akin to starting up a business? codes that involve housing people you dont know and are liable for?
>>1022925
Not as easy to get a loan. If you live in one, you can get a 3.5% down payment FHA loan on the duplex
>>1024041
Yeah but then you pay mortgage insurance which effectively makes it a much higher interest loan.
>>1023418
Literally this. Section 8 will absolutely destroy the value of the home and quite literally niggers will trash it. I have some friends who invested and did section 8 and went bankrupt due to niggers not respecting their home.
>>1024042
Yes but can be refinanced out later, no big deal. The main benefit to an FHA loan is its transferrable.
If interest rates rise to say 6% (not unreasonable in 5-6 years) and you lock in at 3.825% now, the PMI is offset by higher rates the new buyer would be under. This means it's more beneficial for them to just take over your mortgage. It's a hedge against the fed raising rates.
>>1024043
What if you have a shitty house? Are there basic requirements? If it's such a shitty deal, why do people re-up the contract?
>>1024047
Government back room deals with buddies who get cheap financing to buy shithole homes
>>1024048
So, no, there is no basic requirement, other than the house is livable? So basically, if you set up a $200,000 home for section 8, you're retarded? These are things that I already knew.
OP is looking at $75k houses. I think that if he goes a little cheaper, he shouldn't have a problem doing section 8.
>>1024047
Yes there are. Your property WILL fail the first inspection and you will be given a list of things to fix which you can only hope is easy/cheap.
Ill say this, section 8 holds the most potential. If it works then it works very well because your rent is garunteed and your tenant is highly unlikely to move and you have government inspectors making sure your property is taken care of every year. BUT its only such a good deal because thousands have been burned trying to make money off of it before you and they have to pay well just get anyone to participate.
Also youre probably not going to be able to get in on it if you dont have experience as a land lord. I plan on trying it but its probably going to be a few years before I can. And the only reason I want to try it is because I know an old man who is on it and who is a great guy and if I could convince him to move into a house I own I know he would take good care of it.
>>1024056
>75k houses
Call me christmas because I'm green with envy and red with rage. I'm an hour away from the nearest decent city and our condos are still double that price.
>>1024091
http://www.trulia.com/property/3222302115-24-Temi-Rd-Hudson-MA-01749?ecampaign=con_day_propertysearchforsale_bk&eurl=www.trulia.com%2Fproperty%2F3222302115-24-Temi-Rd-Hudson-MA-01749#photo-7
This is the shit we get up here. Over 200k STARTING BID for a 50 year old foreclosed 2 bedroom ranch with clear damage to most walls and the roof.
>>1024096
Sucks bro. I just found one close to a lake for 120 built in 2004 with 4 bedrooms brick and wood floors.
Thinking about buying it and renting to college students for 2k per month if I can handle risk I could probably get the price.
This market looks so good on paper I dont even want to share where it is.
>>1024101
I'm in a similar situation man. Someone is selling a house by me for $25,000 and it's walking distance from a school that people pay $65,000 a year to attend.
>>1024115
Yeah it seems really attractive. Although I know the damages students could do.
I wonder if other landlords completely screen them out since most dont even have jobs. Im thinking I could get huge rents by charging each separately. And keeping their parents on the hook as guarantors. I mean it honestly wouldnt be out of the relm of possiblity to charge 600 to each and get 2400 per month. A single bedroom apartment is like 900 bucks. Dorm living is expensive. A multi bedroom apartment is probably like 400 dollars per person but you should get a premium for providing an actual house.
>>1024123
Tell them it's $600 per room, but if they can sign with friends you'll cut it down to $2,200 as a combined payment. Very much worth it to get them to find tenants for you and pressure them into staying/paying.
>>1024130
How do you get the paperwork for this shit? Would you just go directly to a lawyer before looking for tenants.
>>1024149
Sounds about right, I make 81k at 26 with annual profit sharing and (on years when the company isn't cucked) inflation adjustments. It's nice, but holy fuck does it not matter at all. I still won't own a home with no debt until my 40s. 95% of my friends are utterly fucked.
>>1024158
Come home, white man. The South is waiting.
>>1024169
Too many blacks, friend. They all froze up here. We've got an influx of Indians but their buffet restaurants are too good to pass up so we accept them.
>>1024169
Im investing in Texas. Texas is simultaneously stealing the northeast/midwest manufacturing and California tech companies.
>>1024181
I live in Florida right now. In a couple years, I'm thinking about moving out to Texas to take advantage of the construction boom.
>>1024181
Texas is also shitting the bed due to lost jobs and the manufacturing aspects of the low oil price. One oil rig can support 50-100 people directly and 100-500 indirectly.
>>1024190
Its not a bad idea. As far as im concerned Austin is the best place to live anywhere. Im hoping I can one day move there one day myself.
>>1024197
Which means now is the perfect time to be buying because oil will be back in a few years which is nothing in real estate :^)
Real estate bump
>>1024201
You've obviously never driven in Austin traffic.
>>1024352
Thats true ive only been for UT football games sixth street.
Is there anyone here who can enlighten the board on REIT's? Educate me, as I don't want to buy a house but still would like to invest in real estate.
>>1024376
Reits sound good in theory but their yields are disappointing to me. You could get the same deal with any other kind of divident paying stock it seems like. Im no expert on them though.
>>1024376
I invest in 15 blue chips, and only my REIT and steel commodity stock are doing shit.
>>1024043
you actually have a say in who gets to live in your house using section 8. i also know a lot of people living in section 8 housing that take real good care of the house.
Fuck this, I could do so much money in the States. In my country and city the cheapest apartments start from 150,000€ and rent for an apartment like that is about 700€/m.
