Getting Max Cashflow
You know...I'm looking at a lot of SF properties...and well, maybe it's the interest rates I'm getting quoted, but I'm not making much on many of the properties I am figuring. After Principal, Taxes, Insurance, and Management fee's.
What kind of Mortgages are best for landlords on properties?
Can someone please explain Fannie Mae to me? I have heard that is a way to go for new investors.
I'm getting good prices on the homes...well below market value, just having a hard time finding the cashflow I was hoping for.
JB
[addsig]
I would start out by establishing what you can put down, how much house you can afford, then find a house that has enough rental revenue to make you the profit you want after expenses. I have heard that you should shoot for your monthly gross revenue to be 1% of your purchase price, which can be tough to find, depending on the area you are looking in.
If you can afford 10% down the Option ARMs can be a great way to give you cash flow on a rental. The option Arm gives you an option for a lower payment for the first 5 years. There may be a small amount defferred interest, but who cares it's a tax deduction. These Programs are very popular with investors right now due to the fact that it is very hard to find cash flow in this market. Hoped this helped.
Chad Young
You might need to check for properties in other neighborhoods. Also, look at different classes of homes. Usually, it's not the most or least expensive houses that are most profitable. In my experience, the best houses tend to be in the middle and lower-middle class areas.
As for mortgages, I would suggest 30 yr fixed. Interest rates are as low as the've ever been, and they're about to go up. Getting a property now at a low set interest rate will go a long way toward helping you ensure a positive cash low over the long haul.
The only other thing I would add, would be a suggestion to maybe manage your own properties for a while. This will not only save you some money, but also give you valuable experience to use later when you do hire a management company and need to make sure they're not cheating you out of anything.
Good luck.
When you first begin you really need experience and so you manage yourself. You do not need to inform the world that you are the owner. I always pose as a slightly lower level type grinding for the owner. That keeps me on speaking terms with the tenants. Also If I show up with a spring and can to run a stoppage, or a series of wrenches and do simple repairs I am now one of them. Stay that way it really works.
Forget the one percent rule it is no longer in application, the world has changed . Do not be afraid to make deals and install all sorts of machines. Washer and Dryers are a good source of income and in the changing of the filters you learn a lot about your tenants. Vending machines also add up.
My best was acting as a sort of agent for all the tenants who could do little things like car repairs, servicing appliances. The lady that made the best tortillas in the world and the kids that started a lawn service for the neighborhood. I was their agent.
You must get on the 30 year loan trip and get the lowest interest rate that is out there. No short term loans with exploders. All the biggys in the world that went down the tubes did it on short range paper. Do not listen to your mortgage broker when he prats of 1% or 2% loans. You need to get a stable platform and 30 years is it.
Do not be afraid to participate in weekend BBQ's lots of tenants organize them and make money off the neighbors.
Stick up for your tenants in disputes with local police and other enforcement agencies. Work out an exchange baby sitting deal among the tenants. this makes it possible for some to work and not be tied all the time to the kids.
It is a lot of fun and you will learn a lot. This is the United States take advantage of the mixes of races and culturals. They will teach you a lot.
Enjoy, it is really a lot of fun. Lucius 8-)
Lufos,
How do your tenant not know that you are the owner? Is the name on the lease a company name? Couldnt they find out anyway?
JB,
I think its really tough to make any money renting single family homes. Your experience here is confirmation. The answer is not, imnsho, a matter of trying to tweek another half-point off your mortgage rate or a few bucks out of your operations side by managing yourself.
The answer is to buy another kind of property. Multifamilies (especially in the 15 to 70 unit complex range) tend to "pencil" better. As does commercial property of all sorts.
Good hunting.