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Updated 17 days ago, 12/18/2024
Ready for our second deal!
My husband and I are Teachers and Nurses but dream of supplementing our W2 jobs with passive/investment income.
Fell into a short term vacation property and can't wait to do more investments! We are interested in buying a home or condo for my daughter in Knoxville TN next to either House Hack while she is in college then keep as a long term after. Financing that next deal is our concern as we don't have cash reserves but we do have access to $100,000 equity in our current rental. Any tips appreciated!
Hi @Candy Kimbro! College towns are great options for investment properties. You mention buying a home or condo. Would this be something where your daughter would live and 1 or more of her friends would be roommates? And what are your main concerns about financing?
If we buy in 25 we could rent it out to others first bc theya re required to stay in a dorm the first year. If we wait and buy in 26 she would move in and let others rent with her and hopefully cover the mortgage. rent is super expensive there!. My main concern is GETTING financing for it since we have a high debt to income ratio.
Candy - Is your current rental in your name or the name of an LLC? If it's in your name you can look into the potential for a HELOC or potentially refinance to pull out some of the equity you've created, but you'll need to do the math to see if you're payments will increase based on the new loan terms. The other option I potentially see is to partner with someone that has cash and/or better debt/income ratios and partner on the next purchase. Good Luck!
I believe the DTI is around 34%. It is in our names. Have just heard of LLC so not sure if that would be good for us or not. Any tips on how to look at the numbers to see if it works? Im just now realizing our potential with the first investment and had no idea what a great position it put us in to move forward. We have $1500 in cash flow monthly on average and are 3 years in.
@Candy Kimbro Congrats on your STR property, nice cash flow for sure. Some banks may lend as a HELOC on the rental property, or refinance it. Would have to have all owners on board for this.
I've definitely seen parents purchase properties close to campus to house their kids while they're at school, it's a solid move. My wife and I have a few homes near campus we use as student rentals and they certainly perform well. Averaging $1k/mo per bedroom which is now on the cheaper side of things.
I'd consider doing some kind of cash out refi on the property at a number you're both comfortable pulling out, while still leaving $ for reserves to maintain the STR you currently have. It'll restrict that cash flow, but unlock a nice option for the family. Especially if the other kids follow suit, they'll likely need some kind of housing for a significant period of time nearby so buying now wouldn't be the worst move.
Just my 2 cents. Happy to help however I can