All Forum Posts by: Jason Byrne

Maybe it's a risk-reward thing but when I look at rental rates vs price in my area it seems like you get much better returns when you buy cheap properties. I'm basing that on what Zillow shows for rental rates (actual or estimated) to compare net annual profit (50% rule) to price.  I'm finding it hard to find 8%+ with the 100K+ homes.

From my other post I know I am going to be told that I should leverage. And while I am not taking that completely off the table, for our first investment property I think my wife would be a lot more comfortable in not taking out another loan. And I think I'd sleep better at night too. Maybe once we get one under our belt then we can feel better (and use this one to support a leveraged one).

So question is... for a first "getting feet wet" property... would we be better off going for a 40-60K Apartment/Condo, a 60K-100K SFR or a nicer 100-150K SFR?

I am not handy at all (software engineer: great at building software suck at anything physical) so I think I should probably utilize a rental management company.

Thanks again for your kindness and patience with a rookie just trying to soak up any of your knowledge I can to become a seasoned vet in a few years!

I've had the suggestion a couple of times to maybe structure a lease to own if we get a good renter. I think I have our renter in place already who is an aquaintence who I think will take really good care of it.

Good thought, I'd love to see that as a way out. But I don't think we could really command the premium. It's a 1998 home. Pretty good shape (needs a roof patching.. hopefully not a new roof!!). We could potentially make over the kitchen and bathrooms with granite, stainless, etc. I'm not sure we'd see that return though? But I'm really a n00b so I don't know for sure. I don't see any houses in our neighborhood going for 40K premium at this point. Not a bad area, but not a wealthy one either.

Thanks everyone. I love how awesome and responsive everyone here has been. I can already tell that BP is a great community!

We truly got into an awful situation with our current home. Literally bought at the peak. In the crash we saw a rash of foreclosures (like everywhere), especially it seems in our neighborhood. We lost 60% of the value. That's tough to dig out of. 

In the Orlando Metro area what county you're in makes a big difference. We are just across the line in Orange County (soon moving to much nicer suburb Seminole County) where the city of Orlando itself is located (we are in Apopka). Orange County home prices were hit much harder than Seminole and have recovered more slowly.

Luckily, it's climbed back around $40K since the bottom (according to Zillow) and probably $20K of that in the past year and a half. So the hope is to minimize the bleeding for as long as possible with hopes that either prices recover and we can sell it. Or rental rates increase enough to cover our nut. Either way... it's just making the best of a very bad first home buying experience!!!

I am hoping for much better things in looking forward to my first truly investment property. But a lot of research to do first before jumping into that. And gotta move into our dream home first!

Thanks again, BP!

@Doug McLeod We moved into this home early on in our marriage. It was just before the bubble burst. Everyone told us that real estate was high and might not keep going up, but real estate doesn't go down it just plateaus. HAH! Were they wrong!

So eight or so years later, I'm a lot wiser and a lot more money in the bank. But this was a starter home and we never even meant to be here this long. We need more space, shorter commute, and to be happier in life in general. So thus building our new dream home.

To sell this house and walk away, I'd be probably 40K out of pocket to pay off the loan. So the thought is if I can get close to covering the mortgage now and make it up in the long term, then that is more attracitve than paying the bank 40K and handing over the house.

Maybe that's a wrong strategy, but that's the thought.

I'm 33 years old in Orlando, Florida area. We are currently three weeks away from closing on a new house that we are building. We got underwater on our current home by buying at the wrong time, but we did refinance a couple of years ago to take advantage of low rates.

My current plan is to hold on to our current home and turn it into a rental property. It will probably be a money losing venture for a few years with rental rates not yet up to our mortgage. But I'm hoping to turn that potential loss into cash flow as prices continue to rebound and rental rates will increase in Orlando.

So that is rental property #1.

Beyond that I've got a good nest egg already built up in stocks. After recently selling my business, I have quite a bit of money on the sidelines right now that I need to put somewhere. Stocks don't seem very attractive to me right now at the current valuations. I am thinking about putting it into real estate instead and start building rental properties.

Would it be foolish to buy these rental properties cash? I'm kind of debt averse, especially since I will already have two mortgages.

I am planning to go with a rental management company so I don't have to deal with the hassle of managing it since I am a full-time software engineer. Good idea?

Thanks in advance for any advice for this rookie!