All Forum Posts by: Tyler M

Hi Steve,
thanks for the response, I have been leaning in that direction myself. As I mentioned the only thing making the decision somewhat difficult is the fact that the taxes are so low. In some ways it kind of seems like a waste when a lot of people in the area would probably love to have that tax rate. I would consider a home equity loan if we could take out the complete value of the house (450k) but I'm not sure if lenders are doing that anymore. I heard that they were only giving home equity loans up to 70% of the appraised value.
Has anyone else heard anything different? I guess if you could take out 100% if the equity and the rent covered the loan payments comfortably that would be an option.

Hi All, I was just rereading your posts there is a wealth of good information here. I would like to thank you Jeff, Nathan, Chris, Joel and Kathy for your detailed and thoughtful responses. I'm just doing my best trying to navigate so many different options and perspectives.

Thanks again.

Thank you everyone for the great information. The thing is that since we are retired the only income we have right now is a $1500 a month pension. Someone sent me a link to an article on November 20th, 2011 that said- ."In a signifant change in lending standards, underwriters are now counting rental income toward income qualification. This means you only need a down payment and a 700 FICO score to buy an income property so long as its cashflow positive" I would think that this would be a real game changer for a lot of people but have not heard much about this from other sources. Are you familiar with this new change? Since we only have a pension this change would allow us to get loans correct? Whereas before you needed to show income from other sources in order to buy a cashflow property. If too many people started doing this I wonder if this would cause downward pressure on rents. Thoughts?

Hi, thanks for the feedback admittedly investing this amount for the highest returns is a fairly complex issue. I just figured there might be some financial geniuses that could offer a new perspective or some insight.

The main question I had is the following.

Is it generally better to get loans for 50k properties that rent out for about 1K a month or is it better to get loans for 100k properties that rent out for about 1500 a month but in nicer areas. I have done extensive research for years on this and was just hoping to get some info on this specific topic. This would be in the Phoenix or Las Vegas areas. I guess getting loans for the 100k house in a nicer area would give you less cash flow, lets say 1500 a month. But since the rent is higher overall and you are using the banks money to finance more money on a 100k house than a 50k house wouldn't you would be building more equity? Also since the 100k houses are generally in better neighborhoods they may appreciate faster. My concern is that since I can only get a certain number of conventional loans I want to make sure I make the best possible use of those loans. With any money left over I could do some cash deals. Or would a successful investor break the 600k up into ten 60k down payments for loans on ten 240k properties? I'm guessing if you went this route you could buy 10 multi family properties for 240k each that were in line with the 2% rule. I wonder if this route would give you the maximum return on the 600k. Thoughts?

Thank you for any new insights.

My second question is if we have 600k to invest in rental properties and a credit score in the 700s what are some of the best investment strategies? We heard that you can buy up to 10 properties with loans from the bank as long as you put 20-25% down. (we heard that banks just started doing this about a month ago, why would they change their policy all of a sudden?)

We were sort of looking to buy SFRs in Phoenix or Las Vegas since it is not too far away from CA and you can find properties that are close to the 2% rule. We are a little hesitant about multi unit apartment buildings because I think you would really have to make sure it was an excellent deal before you put all your assets into one deal like that.

Our main goal is maximum cash flow.
Is it better to use leverage and get loans for 10 houses worth 50k each that rent out for close to 1k a month even though the neighborhood might be kind of bad? With ten 25% down payments that would take up 125k of the 600k so we would still have 475k to invest.

Or would it be a better use of leverage to get loans for 10 houses worth 100k each or more in better neighborhoods that might not rent out for 2k a month (maybe 1500)? I guess the advantage here is that you would have more valuable properties (using mostly the banks money) in your portfolio but your cash on cash return would be lower. If we got 10 loans for ten 100k properties with 25% down payments we would have spent 250k of the 600k and be left with 350k.

With the remaining money should we try to find other lenders for more sfrs? Invest in a multi unit? or buy some sfrs all cash at auction and rent them out?

Any suggestions on these topics?
Thank you in advance.

Hello,

I have been reading this site for quite some time and find it very interesting and informative, this is my first post. I have done a lot of research on real estate investing but would like to get others opinions on our situation.

We own a house in California worth about 450k there is no mortgage and very low taxes because our family has had it for about 50 years. We pay about 1k a year whereas people buying now pay close to 6k a year. Low HOA $50 a month. We are currently renting it out for $2,300 a month. Obviously this is a very low ROI and not really acceptable when so much money is tied up in one property. I want to sell the place and buy rentals aiming for properties that are in line with the 2% rule. We also have some savings bringing our total assets to about 600k. (including the house)
My question is should we just sell this CA house outright and then reinvest in rental properties in a different state? Or should we try to borrow against our house and try to use that equity to purchase rental properties? I doubt the bank would let us pull out the full value of the house (450k). My family kind of wants to keep the house and borrow against it because the property taxes are so low. Our credit is in the high 700s. I can sort of see their point but I think the house is getting pretty old and could need repairs soon also CA is apparently long over due for an earthquake.

Any ideas?

Thank you in advance.