All Forum Posts by: Alex Silang

So most people who own their own home are only going to get approval for a single rental home. Exceptions to this is if you make a very good wage (six figures) or rental houses are cheap relevant to rents in your area.

Ugh, this throws a wrench in my grandiose rental empire plan!

I was running some numbers and one thing confuses me.

I've read that banks only allow people to take on a mortgage 2-2.5x their income. Rental income is added at a 75% rate.

Doesn't this limit the size of real estate empires unless someone is making a very high salary?

Lets say someone makes 50k year. He buys his residency at the maximum allowed at 2.5 x 50k = 125k.

He wants to buy a rental property.

$100k mortgage

$1500 monthly rent ($18,000/year)

$18,000 x .75 x 2.5 = $33,750. He is unable to buy the property because it is out of his limit.

I'm probably making a newbie mistake here. What am I overlooking? Are banks really that conservative?

1) Taxes - Uncle Sam needs to be paid

2) Cashing rental checks? How does that work, can you have the management company collect checks?

3) Keeping the management company honest, and switching if need be.

What else?

Alright - complete newbie question here.

Is it good practice to get pre-approved for a mortgage? And should I go to multiple banks to see what the best rate I get? Also is it worth trying an online bank?

Thanks

It is Allston and is a 1 bed room, 1 bathroom. I was just wondering what people are thinking when they buy a similar property to this.

Are college towns typically a good buy for long term appreciation?

Hi everyone, this is my first post. I live in Boston and am an aspiring buy-and-hold-investor. The prices here are ridiculous. I'd prefer to rent to college kids. Usually they are getting the money from their parents, they tend to be from well off families and the market is plentiful.

Here is an example from a realtor.com listing (tenant is really paying this rent amount):

$195,000 asking price

Rent $1150
Management fee (%10)
Revenue net of fee - $1,035

$790/mo mortgage
$210/mo property tax
$ ? / mo insurance
$250 condo fee

We are already in cash flow negative territory and that is without factoring in insurance or repairs.

I am a long-term, buy-and-hold investor. I'm okay with buying a property losing money in the short run if it's worth it. But is there anyway this could work? When looking at cashflow-negative properties, what should one look for?