All Forum Posts by: Ryan Dressel

Welcome Rafal Kowalczyk I'm rather new to REI as well but am quite familiar with the area if you want to connect. GL!

You can also use your monthly rental income to invest it in investment vehicles (mutual funds, etfs, notes, individual stocks, etc). Hypothetically, if you invested $500 from your rental property each month, and $500 from a side/FT job ($1,000 total) - for 5 years at 5% annually, it would grow to $68,000 vs only $60,000 if you just let it sit in a savings account. That's not a huge difference but it's enough to accelerate your savings goals for the next property you are seeking to buy! Additionally, 5% market returns could be a conservative return depending on the aggressiveness of your holdings. That's another can of worms though. Another idea could be to invest the income in other business opportunities or passive income investments. GL!

Thank you @Jack Butala !

Greetings Bigger Pockets Community!

I've been browsing the forums for a few months, and have learned alot already!  I purchased a row home in Conshohocken, PA (in between suburbs and city of Philly) in 2015, and my goal is to eventually rent this home out.  I joined BP to learn about real estate, ways to generate passive income, and gain from the experience of those who have followed this path before.

My fiance has student loans to pay off which will be the timeline in terms how quickly we'll be able to buy our next house, and rent out the current one.  I am anticipating 5-8 years time.

The row home is a 2/1, 1,100 square feet with a small fenced in yard.  I paid $176,000 for it in '15.  Properties in the area are a mix of new/high end condos and older/densely populated row homes.  A 1 br condo currently rents for about $1,500 / month which is about what a 2 br row home in decent shape rents for.  My fixed payments (including taxes, escrow, & mortgage) are $890 per month, so I think that there is some value to be had when the time comes!

Ryan

I'm in similar shoes in the Philly area market.  I would recommend crunching the numbers to ensure that your all-in monthly payment will be profitable when you go to rent it out down the road.  Ie) If your all-in costs per month are $1,000 - and you can only rent it out for $1,100... then your margins aren't very profitable.    The more you can put down up front will drive down your monthly mortgage costs, allowing your property to be more profitable when you rent it out.

My primary residence all-in costs are $923 / mo ($880 in 2 years after PMI goes away), and current rental rates are $1,500-$1,700 for my property type/area.

Thank you!

Great thank you! I'll check them out.

Piggy-backing this post if anyone has any conshohocken recommendations! (electrician, GC, plumber).

Thanks!

Anyone have any recommendations for a good electrician, plumber, and/or general contractor in the Philadelphia 'burbs (Conshohocken).  The work would just be for one property, not a slew of projects.  Thanks in advance!

Ryan

Hi Jordan,  

I anticipate following a similar path down the road, and am interested in how your situation turned out. The rental margin vs. my PITI is very similar! In about 6-8 years I plan to purchase a new home in order to generate rental income from the existing one.

To answer your question, an option to consider is a home equity loan on your current place, which would bring you up to a 20% down-payment on your next place. That way you won't have to pay PMI. I don't know what you're credit situation looks like, but as long as a lender approves you for the 2nd home purchase, you'd simply have 2 mortgages. You could use the rental income to pay off one of them quicker - or re-finance.