/biz/ - Business & Finance

>>552168

also this isn't some pipe dream, my hobbies and shit are free and I have no life so I have the down payment because I basically save 2000 dollars a month minus what's been going in the 401k cause of match and little to the IRA.

It might be good to either get a home with an extra bedroom to rent out or a duplex so you can live in one and rent the other out

>>552211

There aren't any duplexes in my target areas and even if they were they would probably be more than I would want to spend. Most of the houses I'd want are 2br so that's exactly what I'm planning on doing if I don't end up just renting the whole thing out.

What I don't understand is the whole 15 year mortgage thing. I buy a 40k house put down 20k that's like 115 dollars a month plus interest so what like a 200 dollar mortgage payment? So if I end up renting out a room for at least 400 or the house for like 800, even minus expenses that I know are inevitable, I'd be doing okay. Not worth it for some of you sure, but not bad for me. Am I calculating this wrong?

>>552211

What this guy said on the duplex.

Also, depending on where you are in the country and some other factors, you may want to consider putting less down to retain liquidity. In some cases, putting more down can actuly increase your interest or payments. No, I'm not shitting you. I've seen more affordable payments on a 95% loan than on an 80% so you'd need to look at options. In my opinion, the duplex is a good idea with a low down payment because you can sell a quarter point or less in most cases to mitigate closing costs, rent the other part of the property, and use the income to cover mortgage amd part of improvements. After 2 years most banks will allow the other tenant's rent as a source of income. Since you appear to have no property management you HAVE to do this for two years for it to count as income in the case of declared income or another mortgage. Then, you can rent both parts of the duplex, count the income from the property to wipe out the debt against your credit (so to speak), use the money you didn't spend on the down payment as either improvements to the property to get a new appraisal and levrage equity, buy the house you want for yourself, etc. This way you at least have a place to live and part of it is getting paid for by a tenant. Being a duplex, banks are more likely to accept rent as income over just room rent. You also have more options this way.

>>552225

What do you mean you don't understand the 15 year mortgage thing?

>>552244

Would the mortgage payment be that low? Also would a bank even give me the time of day for a mortgage with no credit?

>>552230

also I appreciate the duplex idea. I'll keep looking but I don't see any just driving around these areas. The duplexes all do tend to be investment properties in shitty areas that slumlords command or nicer places than I could afford.

Idk I think I really just need to figure out if i want to live there or have a property to rent out. I guess the idea of having a cheap shotgun in a decently cool area would be that I could afford it myself on my income, and then renting a room out would make it that much easier, especially given how low the mortgage payment would be.

Eventually I could use the equity for a down payment on a nicer place or just keep it as a rental property.

>>552168
OP, at the very least you could just continue to live with your parents (for free) while working full time. With this plan you could save much quicker than if you had a mortgage payment. If they start to get annoyed, pay them some rent (maybe like 100 a month).

Honestly OP consider the fact that rent/housing is usually a third of people's incomes. Now consider the fact that you can ignore the single largest expense for an average person completely. That alone I would consider a good investment, in the sense that it is money not spent.

>>552268

In my opinion, putting all of your liquidity in to a shotgun seems stupid. You could put 10k in an index making 12% to 20% a year which would help offset the assumed 4% to 5% on the remaining 30k. So you are kind of breaking even on your interest. There are lots of ways to look at it and rearrange it. You would still have equity with 10k down making payments. You need 2 years of rental history to even think about having a bank consider it income, the equity is there for just about anything to want to do with it, whenever you want it.

Your payment wouldn't be quite that low but it wouldnt be very high. You also have property taxes, 1 year homeowners insurance due at signing, etc. So depending on how you want to factor it, you are paying more than $2,400 for the first year. You are paying payments, insurance, title insurance and other closing costs, and taxes. Plus any improvements you need to make it rentable. It is going to be cheap for a reason so assume you will fix a few things. You won't just walk up, buy a house, and slap a for rent sign on it.

The monthly payments are usually just interest, principle, and taxes. Just keep in mind most times you can't get room rent to count as income. It needs to be a seperate dwelling or you owe the banker 5 blowjobs if he gets it passed on room rent. If you aren't worried about counting it then it doesn't matter. However, for second mortgages down the room (assuming you want this to be a rental and have a house) it is best to nullify that debt burden by considering it an income producer. Banks will loan you money on that type of note and prime lenders prefer it. It is a lot less capital on their end and you seem to have steady employment. Banks want steady income, probability of that continuing, and little credit can be better than bad credit.

>>552308
To add on, I would wait a while to build up your savings a little. The more your down payment is, percentage wise, on a home the less important your credit will be.

I think owning a rental property is a good idea, but be careful with it. My uncle just kicked out tenants who left dirty diapers on the floor for weeks. I know it doesn't happen every time, just be aware of the possibility of something going wrong.

Also, with renting, have your tenants rent check cover everything. You do not want your tenants missing a payment to the electrical company or water company since that will reflect poorly on your credit. You will lose a bit of profits in the winter with heat bills being so high, but it will save you the headache of finding out your rental's electric and water bills are over due for 4 months.

I may be a little risk averse, but make sure that you have 6-12 months of monthly expenses in cash saved up before investing. This way, if shit hits the fan, you have a whole year to sort things out and you won't be forced into living month to month.

>>552168
>>I want to put 20k down for a 20-30k mortgage, so 50% down

You will need to shop around to see if you could get a mortgage on such a small amount. Bigger banks won't touch anything under 50k. A smaller local bank might go for it. Otherwise it would be a 20-30k personal loan at a much higher interest rate.

>keep living at my parents and rent the whole thing out

Do you have what it takes to be a landlord?

>>552264
>no credit

No one will consider you. After 2008 the standards went way up. Get a credit card on monday and try for a mortgage in 5 years when you have established credit.

>>552314

It may have sounded like that but i didn't intend to put all my liquidity into it, obviously i will have my six months emergency and continue investing in mutual funds like I've been doing. Partially my thinking is that I really do want to get out of my parents house, mostly because it's a boring suburb and I have to commute and hour to work everyday, and rather than renting I think owning would be feasible. So basically I'm just looking for a better deal than renting, if not the best way to maximize wealth building. And if everything, from insurance, property taxes, mortgage etc is like 600/month that's easily doable. Also I really doubt we'll see 12-20 percent returns over the next couple of years, and If I'm renting a room, while I know it won't count toward income, that'll basically make my mortgage free allowing me to build equity and put money into my scottrade account.
>>552324

>No one will consider you. After 2008 the standards went way up. Get a credit card on monday and try for a mortgage in 5 years when you have established credit.

that's what i was afraid of, I guess I'll have to see if it's true. I hope the standards haven't gone way up, I see some crazy nig nogs that should not be homeowners being homeowners.


>Do you have what it takes to be a landlord?

Well my sister is in college and my parents are pretty enamored by the idea of her living with me, and even if not, she pretty much guarantees a stream of responsible young christian students that probably wouldn't fuck things up too badly for at least a few years.

>>552324

>You will need to shop around to see if you could get a mortgage on such a small amount. Bigger banks won't touch anything under 50k. A smaller local bank might go for it. Otherwise it would be a 20-30k personal loan at a much higher interest rate.

you do seem to be right about that though, that seems like it'll throw a spanner in the works.