All Forum Posts by: Mike Sheppard

@Lynn McGeein That is great to hear. I am planning on going down there within the next month or so to scope the area out and educate myself some more. Maybe try to link up with a realtor.

 The problem with where I am at now, the DC metro area, everything is so expensive. If you go into the cheaper areas around here, the crime is high. I've been to Raleigh a few times. It's a pretty nice area. It seems to be growing pretty rapidly with new construction and what not. And I have family down there. In fact my uncle is renting to live down there after he lost his house in a divorce. There's always the chance even he could rent the house from me. But that is all speculation and nothing that I am counting on. And the prices are much more do-able for me down there. If I could get a house for $150,000 down there, I could still afford to live up here. But if I got a house up here, it would be far away from my work and I would have to live in it.

I definitely want to jump in and get going. I've got some things I need to take care of first, such as pay off some debt, save up some more for a down payment/closing costs/reserve money. etc. In the mean time I want to get my head fully wrapped around what I am getting myself in to.

Do you know how good of a place Raleigh, NC is for investing right now? That is where I was looking at.

Thank you. I guess I am going to have to really learn and think about this. Rental properties don't sound too promising.

@Matt Devincenzo That makes sense. What is the normal DTI limit lenders look for?

I have another question for you guys if you don't mind!

If I buy a rental, and it pays for itself, even though I make little or no money off rent, would a bank allow me to buy a second one? How does that work?

For example. Based on my income let's say I can only afford ONE $200,000 house. I buy that house, rent it out, and break even every month. Technically the renter is paying for the house, I'm not having I spend any of my own money on it outside of random major repairs and what not, and possible vacancies, which I will have money set aside for anyways. Would a bank loan you more money to buy a second one even though you couldn't afford it if someone wasn't renting the house?

Sorry if that question is unclear. Having a hard time phrasing that the right way.

Okay that makes sense. So the real money of buying a rental does not come from rental income, it comes from the renter paying the mortgage down. It sounds like I will need more than 5% down to have a chance of breaking even. And it seems the most important part is to find and make a good deal. The better the deal, the more the profit when the house gets sold.

Is this a good place to start for a new investor like me?

I ultimately would like to work my way up to apartment buildings and office buildings. That takes some serious cash and I don't know where to start...

That is exactly what I wanted to know. So if most of that get's eaten up from other expenses, how do you make money renting? By eventually selling the house?

I have a quick question regarding income from rental properties. I am a completely newb as of now, and am trying to learn what I need to learn before I get into anything. I am in Northern VA, and I am looking at possible buying a rental property, or two if possible, in Raleigh, NC. I have family down there, and it's not that far of a drive if I have to go down.

My question is, how much money, in amount or percentage, do you aim to make each month off the property?

I've been looking through a few properties just to get a feel for them. For example, there is a 3 bedroom, 3 bathroom, 1600sq/ft house for sale in Northern Raleigh for $140,000. Lets say I can snag it for $130,000. Mortgage ends up being around $850 a month, including property tax, depending on what I put down. House is in good condition, little or no repairs need to be made. Based on houses in the same neighborhood, with almost exact specs, they rent for around $1,250 a month. So if I rent it out for $1,250, and pay $850 in mortgage, that is $400 in income a month. Is that considered good? Bad? Average? I know there are other expenses, I read briefly about the 50% rule.

Am I close here, or am I way off? What is an average situation?

You are right @Joe Fairless . Lots of my friends tell me I'm crazy for wanting to get rid of my sports car and house and what not, and they tell me I am successful. My response is usually something like, "The only thing I am successful at right now is making someone else rich, and not securing my future." Most people don't get it... I'm not doing this because I want to be super rich and own a ton of sports cars (cars are a passion of mine). I'm doing this because I don't want to have to worry about if I will be able to retire one day... whether there will be retirement money left for me. I want a clear future, clear retirement, and more time for myself to enjoy life. Not to say cars and houses are not motivations, they sure are, and everyone has material motivations, but they are not the main driving force. I want my money to work for me, not the other way around. When I tell people this, they either say it is dumb, or it is risky. I know this to be neither. It is risky - to the un-educated person. And that is why I am here, to get educated.

@J. Martin I am going to a meeting this Saturday at 8am. I even convinced a friend of mine from our GT-R club to join me. He had mentioned being interested in real estate investing and I told him to come along. I'm very excited to meet some like-minded people, and am hoping to meet some experienced investors that have time to talk with me.