Getting started in Rental Property investments!

[Hannah Trent]

Hi! I'm Hannah and am new to BiggerPockets, I am just dipping my toes into the idea of getting into renatl properties. Recently I have found myself in a predicament of either selling my current home and using the profits to invest in rental properties that way or throwing around the idea of renting it out. I got my home in 2020 so my interest-rate on my mortgage is extremely low at 2.9% so I'm not completely sold on the idea of selling. Looking for advice and opinions, always open to new ideas. 

Looking forward to connecting! 

-Thank you! 

[Nathan Gesner]

Quote from @Hannah Trent:

Welcome to the BiggerPockets forums!

Run your home through the BiggerPockets calculator under TOOLS. See how it performs as an investment. If it's making a good return, then keep it. If it's a stinker, sell it and invest in something that produces better results. I personally believe you should never sell a property unless (a) it's failing to perform, or (b) you want to use the money to buy a better investment.

/Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

[Carolyn Yates]

I am not sure how much equity you will have if you just purchased a few years ago, but many investors use a HELOC on their primary home for the down payment on their investment property.

[Sam McCormack]

Hi Hannah, it may be your best interest to take out a HELOC and use that money to invest. Not sure of how much equity you have in your primary residence, but it would be a good place to start!

[Rene G.]

@Hannah,

If that's your primary residence, where are you going to stay? Can you just stay there a bit longer, save for another down payment, then purchase another primary residence (using a landlord perspective, i.e. house hack the next house until you turn it into a rental). You can do that again and again. 

I say, "Never sell!"

I'ver heard hundreds of times, people saying they wish the never sold. I never hear anyone holding long-term complaining they wish they sold. Imagine, if one day you hold long enough and you have fully paid off SFRs!?

Everyone wants to talk about taking on a bunch of debt and adding a bunch of doors. I think less is more. If you're looking for "Real Freedom" as a landlord, what's better... Having a lot of complexity, e.g. 20 units all cashflowing $100 for a total of $2k per month...OR... 2 fully paid off SFRs cashflowing $4k per month?

Oh, just remember, if you're current home is your primary residence, and if you filed Homestead with your local property appraiser, then when you convert it into a rental your property taxes will go up. Meaning when you run the number, consider you're escrow/mortgage being higher. 

Feel free to direct message me if you have any questions.

Rene G

[Hannah Trent]

Quote from @Nathan Gesner:

Quote from @Hannah Trent:

Welcome to the BiggerPockets forums!

Run your home through the BiggerPockets calculator under TOOLS. See how it performs as an investment. If it's making a good return, then keep it. If it's a stinker, sell it and invest in something that produces better results. I personally believe you should never sell a property unless (a) it's failing to perform, or (b) you want to use the money to buy a better investment.

/Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

 Thank you! I will look into using that!! 

[Erik Estrada]

Quote from @Hannah Trent:

Hi! I'm Hannah and am new to BiggerPockets, I am just dipping my toes into the idea of getting into renatl properties. Recently I have found myself in a predicament of either selling my current home and using the profits to invest in rental properties that way or throwing around the idea of renting it out. I got my home in 2020 so my interest-rate on my mortgage is extremely low at 2.9% so I'm not completely sold on the idea of selling. Looking for advice and opinions, always open to new ideas. 

Looking forward to connecting! 

-Thank you! 

 This may backfire since most investment property lenders want to make sure you are not intending to live in it. Although there are a handful of lenders that will lend to you if you recently sold your property. 

It is best to leverage some of that equity and buy more properties without having to sell. Or turning your primary into a rental and then buying another primary with 5-10% down. 

[John Morgan]

@Hannah Trent

Take out a HELOC and buy a rental with 20% down. Or use it for a 5% down payment on your next house to live in. Then rent your current house out. Repeat in a year. Keep buying houses with 5% down each year and move in. Then rent them out after a year.