Having Rental Properties Fund Properties You Are Flipping
Is it a good idea to buy rental properties in order to fund properties you are flipping (assuming you also want to own rental properties). This way, your rental properties will "fund" and pay the carrying costs of the property you are rehabbing. If so, should one buy rental properties before even considering flipping any properties.
I try to structure all my deals so that they are ALL profitable if you are running into properties that are costing more or taking longer maybe you need to rethink your deals... or you might find yourself in troubl really fast
I'm trying to go the other direction. The profit off rentals is generally maybe 100 bucks a month. It would take a lot of rentals a lot of months to pay for just one rehab.
On the other hand, for every rehab you do, that can be enough to get you into 1 or 2 rentals.
Do whatever makes you comfortable though. If the numbers work, then try it.
Sorry, to clarify, I meant the rental properties would cover the carrying costs of the property you are rehabbing, i.e. monthly mortgage cost, insurance, insurance. I did not mean to imply the rental property would pay for aquiring the rehab property. What do you think of this idea.
As was mentioned above, there are many people who do the opposite of this. I'm not sure why you would try to build up enough rentals to try to pay your rehab costs. That sounds like a long slow process. You have to have some cash to get started, whether it's rentals or rehabs. Once you get a rehab sold, this should furnish the money you need for the next one.
I am trying to do just that. I am trying to get a duplex and a house for a total of $60,000. I can rent the duplex for a little clean up for $900 per month that will cover the payments on the house and duplex while I fix the house to resell. Then i will fix the duplex up better and sell it too. Your idea is great and i like cheap duplexes as the avenue to make money on rentals. You can get more rent for the same mortgage dollar
Good LUCK and Thank You
Hope this helps some
Ted Jr