Rental Property Investor · Bay Shore, NY · Member since 2019 · 9 posts · 0 votes
Of the bat I'm a newbie, I been wanting to start in real estate for years but for some reason I haven't. I set a goal for myself that in 5 years I want to be able to quit my well paying job if I want to( not that I will). I also want to be bake to retire by the time I'm 50(I'm 36)I have a house I own & got some equity built up. I have a family of 4 including myself. My question is should I rent out my house for about a year or so. Or should I just try to buy another house. If I rent this house the cash flow is about more or less 15-20k a year. So it's crazy to me that I am technically losing that much money a year per say. I also bought this house with a VA loan. Thinking about converting it into a FHA loan so I can use my VA loan later on. Need some input! I'm super hesitant in what direction to go. I will go in one eventually I know that for sure!Thank you so much for the input everyone.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Juan Pichardo, first off, are you sure about the $15-20k annual cash flow number? What is your house worth? What would it rent for?
I don't think you can refi into a FHA, since that product is intended for first-time buyers, which if you're refing...you're not. A conventional loan would also be better because you won't have to pay PMI for the entire term of the mortgage.
You asked if you plan was "crazy." No, not necessarily, but I that it's uninformed based on what looks like a completely unrealistic analysis of your residence's income potential and misunderstanding of loan products.
Quit your job in 5 years--maybe. "Retire" in 14 years--certainly possible. Post your details and questions here and the community will help you sort them through.
Rental Property Investor · Bay Shore, NY · Member since 2019 · 9 posts · 0 votes
7y
Hey @Jaysen Medhurst ,
Maybe I’m not educated enough. But I have 2 apartments. The main part of the house and the downstairs. I’m not sure how much my house is worth. I rent downstairs for $1400 & where I stay I can probably get anywhere from 2k-2500 maybe 2700. After deducting utilities split that I’m thinking of/insurance/mortgage looks like close to 15k or less. I think my house is worth over 390k.
But should I rent the rest of the house or try to buy another house. What’s your advice?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
@Jaysen Medhurst FHA is not for first time home buyers....you just have to owner occupy for a year.....
@Juan Pichardo Above is one of two reasons you wouldn't want to refi into an fha....fha has MIP for the life of the Loan, 11 years if less than 90% ltv. If you refi, go conventional...less than 80% ltv, no PMI/MIP.
Rental Property Investor · Bay Shore, NY · Member since 2019 · 9 posts · 0 votes
7y
Hey @Anthony Dooley,
Well I did and maybe I’m not understanding what it really means. I think I do but that’s why I’m here like a rookie like a lot of everyone else. Hopefully I can meet and get some input of some nice investor or just nice ppl that like to share their experiences and knowledge. Thanks for your input.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
7y
@Juan Pichardo The type of loan is not an issue. The FHA loan has MIP for the life of the loan, so I would stick with your current loan unless interest rates drop lower.
Cash flow equals your monthly gross rent, minus expenses (taxes, insurance, repairs, etc) and minus debt service. If you are actually getting $20K per year after that, I would consider it. The next question is, Where will you live? What will it cost you to get another place? Also consider that sometimes tenants don't pay or you have a vacancy. You will need to cover the mortgage of two places until it is rented again.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Wayne Brooks, agreed, but still pretty sure you can refi INTO a FHA loan.
@Juan Pichardo, your home will not make a good rental. At max rent, you'll just be hitting the 1% rule. With traditional financing (75% LTV) and NY property taxes, you're very unlikely to cash flow at all. And certainly not $15-20k/year.
You're forgetting a lot of expenses: Repairs, CapEx, Vacancy, Management,Taxes.
If you truly want to get going in real estate, sell this place and get a 4-unit that you can house hack for a while. Make sure you run your numbers both ways (when you're living there and when you move out) to be sure it will make a good investment.
Rental Property Investor · Bay Shore, NY · Member since 2019 · 9 posts · 0 votes
7y
Hey @Anthony Dooley,
Great information. I will be living at my parents house - not inquiring any more expensive (maybe less) than what I have now. This was already talked about the plan and i am getting great support! I’m still doing the math on it. I feel is the right move. But hesitant about the move.