First Steps
Looking to buy first rental property. This is my current financial position:
Have about $2,500 available on cash and around $25k worth in equity on my house. (have very good credit). I am interested in buying and holding on to the properties for the long term. What are my best options available?
ps. What do you guys think about buying at Pre-construction prices?
Thanks so much for all your help guys!
jose
Jose,
First, you don't have that much in cash reserves. Buying a rental property can be done with low to no money down, but you can't keep it without money. It is going to cost you money right from day one. If you purchase an occupied property you will be a little better off, however I still don't recommend buy and hold until you have a next egg big enough to cover most problems that you may have.
In any event, with the resources that you have available you really need to focus on buying homes creatively with no money down. Your $2500 really isn't enough to do anything traditionally and once that is spent you would be done anyway. Knowing how to buy homes with no money is an essential thing to know when you want to make a living in real estate. Money can be spent very quickly in this business and if you don't know how to buy with no money, you will eventually come to a hault.
In any event, depending upon the price of the properties you are going to buy as rentals. You may want to consider using the equity in your home to pay case for rental properties (provided that they are less then $25k), and then refinancing those properties to recoup your cash so you can do another deal.
Another option could be to use the $25k as down payment to buy homes, however once it is spent, you won't be able to buy any more homes using this method until you pay donw what you have borrowed- this is where the art of buying with no money down comes in.
You are better off then many who start off in the business. But I'd act like I had nothing when starting.
[addsig]