All Forum Posts by: Nathan Pitchford

Not worried about this one. Like I said this wasn't by choice getting this property, it was already mine and even if I'm losing 100/monthly after all expenses this is better than the alternative right now of selling it while the market is low. I'm using this as experience being a landlord and managing my own rental property. I've been through 3 tenants in 2 years and seem to have the handle on what it takes. My question is pertaining to where I go from here. Now I want to get some better properties to make up for my bad one and then to continue to create positive cash flow or equity building. I'm still leaning towards 10-15 year loans and breaking even or 100-200 positive cash flow rather than 30 year loan and 500-600 positive cash flow. I just wanted to see how to go about getting multiple properties and have a plan in place so I can be prepared for when the bank says no on my 3rd or 4th property. Here's a little details on my situation:

I'm 33 and I'm looking to retire by 50 to 55 at the latest. I want to build up enough to have 10,000 monthly income by the time they are paid off. I figure this will take me about 12 properties all on 15 year loans in the next 4-6 years. Sooner the better to take advantage of great interest now. I can buy properties in the area for around 110k that rent for 1200. Interest rates I can get are at about 3.25% fixed for an investment property for 15 years or 3.75 for 30. I plan to purchase with 25% down on the loans, but will eventually run out of cash to do this. So that's my question. Do I go 30 year loans for the tax advantages and get higher supplemental income now or do I continue with initial plan to pay off all properties in 15 years? Do the higher payments and dti of the 15 year loans hurt me on getting future properties? Just wanting to see pros and cons of either from experienced people who have been there done that. Thanks.

I jumped into the rental world by default after buying a house and not wanting to sell my old which I was upside down on. I decided to rent it rather than take the loss and even though I owe 30,000 over value I have positive cash flow of around 200 before expenses. Anyway this made me start to think about the fact that I could buy similar priced homes in foreclosure below market value and rent them and get closer to 600-800 positive cash flow. Anyway some questions behind that. If all goes well I would want to continue adding homes until prices go up or interest rates go up. All the homes will be financed. That's where my question comes in.

At first I thought I could do 10-15 year loans and still positive cash flow a small amount like 100-200/month, but I'm concerned then due to the higher payment and DTI. The main upside that I see is I would be building equity fast. The only downside I see to the shorter term loans is higher dti that may pose a problem when I want to add properties. Each property I add would require at least 25% down and eventually I would max out around 4 properties. Will banks make loans based on equity in other properties? Or am I better off going 30 years on these properties and getting higher cash flow showing extra income for the business and then using that extra income to qualify for more homes? Also that would give me more tax incentives with the higher interest, correct? It still seems eventually that I would hit a wall as most banks don't want anything higher than 40-50% DTI. Just curious what others are doing? If I buy a property and I show I have the ability to turn a profit, it makes sense to me that they would allow another loan and this would continue indefinitely, but I realize that this probably isn't how it actually works. How did most of you go about this and when did you hit that wall? How did you overcome it? Thanks.