Starting out. Looking for advice, insight or guidance

Starting out. Looking for advice, insight or guidance

Erie, PA · Member since 2018 · 413 posts · 348 votes

Long time reader of the blog, but not so much the forum so if this is in the wrong spot I apologize. I figured this would be a good place to get some advice, insight and guidance from the professionals. 

Been reading bigger pockets for a year, talked to a few current landlords, and been doing my research before I take the leap in being a landlord. I just dont know what route I want to take that would be the most beneficial for both long term and short term.

I currently have about 65k in my savings. My house is could probably sell for 120k and I have 58k left to pay off.. Within the next year, I can see purchasing a new house for primary residence. There wont be any house hacks or anything and will take 40-60k between us for a down payment. 

Do I want to rent my current house after moving out? I would be profiting about 200-300 every month. The house is in pretty good shape, 2 bedroom, nice area. Would be good for an older single or couple. I am not very handy, so this is something to keep in mind. 

or

Do I want to sell my current house and put some of that money into savings and the rest into other rentals? There is a good amount of affordable student housing from the different colleges in the area that I could probably get in with 20-30k. 

The part where I am struggling with is if I keep my house, as well as buy a new one, my savings is basically wiped out. The idea of this scares the heck out of me. For the 200-300 every month, it doesnt seem to be worth it in the short term (I know long term it would be worth it.) However this definitely seems like the easier transition into being a landlord. 

Did anyone face similar dilemmas when starting out? Any suggestions to keep my savings up if I keep my house now? Or is this just wishful thinking? Any thoughts, experiences, or opinions would be welcomed. Or just how to calm down the anxiety starting out with something out of my comfort zone? lol Thanks for any thoughts.

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Investor · Williston, ND · Member since 2017 · 180 posts · 36 votes
8y

@Joe M. I would most definitely keep and rent out your current home if you are looking at moving on to another for yourself. The mortgage on it is an owner interest rate verse an investor interest rate so you are already ahead of the game on that. 

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  • Portland, WA · Member since 2018 · 8 posts · 1 vote
    8y

    I have a 10% down 120% ROI and about 100k equity rental so I think about it all the time....sell or keep it. I am very handy and there is very low expense to upkeep. Better numbers for you.....$600 pr mo payment 1350$ rental income 2 months go to insurance and taxes. $7500 pr year income assuming nothing goes wrong and 0% vacancy factor. 13 years payback to make my 100k equity. 23 years left on the mortgage. What would you suggest I do? .... Thinking about your situation in the same manner you have 62k in equity and make 2500 per year (2 months to taxes and insurance) it would take nearly 25 years to get back that 62k assuming you do all the work yourself and a 0% vacancy factor. I would say leverage your assets. It would take you twice as long to get back your equity as I need to get back my equity. (Not bragging or narcissistic, just trying to help) But it depends on how many years you've paid off.

    Best of luck and bigger pockets to ALL!

  • Catskill, NY · Member since 2018 · 636 posts · 668 votes
    8y

    You could rent your current house out, then use a FHA loan and only put 3.5% down for your new primary home. That way you have a rental bringing in a few hundred a month, a new primary home, and most of your savings still in the bank.

  • Erie, PA · Member since 2018 · 413 posts · 348 votes
    8y

    Sean and Chris, thanks for the replies.

    Sean definitively leaning towards that.

    Chris, would only putting that down kill me on interest on my new house? 

  • Catskill, NY · Member since 2018 · 636 posts · 668 votes
    8y
    Yeah, you will pay more interest over the course of the loan because of the higher principal amount. I did a FHA loan and then took out a home equity loan, when I had enough equity, to refinance it into a 15 year mortgage. There was no closing costs since it’s a loan and not a mortgage. And I save a ton of money on interest. It’s not for everyone, but do some more research and run some numbers and see if it works for you.
  • Investor · Williston, ND · Member since 2017 · 180 posts · 36 votes
    8y

    @Joe M. I would most definitely keep and rent out your current home if you are looking at moving on to another for yourself. The mortgage on it is an owner interest rate verse an investor interest rate so you are already ahead of the game on that. 

  • Rental Property Investor · Bethalto, IL · Member since 2014 · 319 posts · 103 votes
    8y

    @Joe M. i agree, i would keep your current home since it has good long term financing on it.  $200-300 might not sound like a ton of cash flow, but that could pay a large portion of your new mortgage on a new house.  You could repeat this process a few times over the next few years, and have eventually have enough rentals to be paying your mortgage. :)

  • Erie, PA · Member since 2018 · 413 posts · 348 votes
    8y

    Thats the idea DJ lol

    I need to learn more about home equity loans

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