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Everytime I start reading about rental properties I get all hot and bothered. If I had things to do over again I think I would have bought a duplex as my first home. One guy a coworker knows buys a new duplex and lives in it for X number of years, apparently if the place is your primary residence for however many years (3? 4?) when you sell you don't have to pay capital gains. In this case he's not selling, just building a slew of rental properties, though. That same coworker lives in a duplex and the other side has been his long-term renter for 8 or so years. They're looking for a single family home now, but still planning on keeping the duplex. It's paid off too, which is awesome. I'm a pretty conservative guy and I think I could make it work in my favor, but I probably won't ever get into it, at least not in the next 10-15 years at least.
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May 13, 2013 13:42
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My sister's boyfriend flips houses, he's contemplating buying a rental and I'm not sure if it's within the realm of possibility or not. The housing market has really picked up since his last flip and he hasn't been able to find a new house, everything is going for too much to make money on. He's been doing some other work in the meantime to generate some income. He would be buying the house cash for around $80k, it's a 2br single family home, and he would do some fixes in the kitchen and bath. Projected rent is $850-900/mo. I don't know what the actual value of the house is, I assume he's buying it below market. I guess his plan would then to get a HELOC on the rental when he would find another place to flip. He does all the work himself so he only does one house at a time (slowly, haha). I ran some numbers and a HELOC for $60k @ 3.25% for 10 years is around $585/mo, so that doesn't really leave much left over for ongoing maintenance / vacancies, etc. On the bright side, he can tackle any maintenance issues that the house has himself (and has the flexibility in his schedule) so upkeep should be less expensive than paying someone to do it. The risk seems like it should be fairly low since it's in a good area and it will be paid for. Edit: More information I guess the deal is close to done. My sister said it's worth around $110k as is, and the seller was going to put it on the market with a realtor for a fast sale for $90k. My sister's boyfriend offered $80k cash no realtors with 2 week close and I guess they have arrived at a verbal deal (the seller is traveling so I dunno when it would happen) at $82k. So given those numbers, does that change anything? It seems if it's worth $110k and he's getting some free equity to borrow against that sounds fairly promising. dreesemonkey fucked around with this message at 18:10 on Aug 19, 2014 |
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Aug 19, 2014 16:55
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ifuckedjesus posted:Typically you can't get a HELOC for 6 months - 1 year after you buy a property due to "seasoning" requirements. It's also harder to get one on investment real estate - even if you do get one, it likely won't be at prime rate (3.25%) as you calculated. Assuming they do their due diligence confirming it's not an empty shell of a house or something, you'd think they'd jump at the chance to loan money against a paid-for property. But I dunno. He ended up buying the house, is in the process of doing a kitchen remodel, and is looking to rent the house. The house is in fantastic shape, just needs some updating and landscaping. If renting it doesn't work he'll have no problem selling it off, cute house in a great area.
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Oct 1, 2014 20:36
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