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Best types of rental properties

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Money Talk > Real Estate

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Wino
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quote:
Originally posted by Brownsfan2k5
You live in Dubai? Are you a contractor for the military?


No. Private business based in Dubai. I am ex-Navy. I got out in the late 1980's.

quote:
Originally posted by oldguy
Homeowners go bk when they are forced to sell while underwater - normally due to a job loss, job move, etc. But landlords don't have that issue, renters pay your mortgage (whether you have a job or not).


As long as you have renters. As long as the property you choose goes up in value. As long as your income covers your needs above the rent.

I don't encourage people to borrow money to invest. I suggest one live within his means, and invest the surplus. He still gets rich over time. The 11% returns are still there. He's not paying PMI. He's not paying mortgage interest. His risk is substantially cut due to the fact he doesn't have a lot of loans ready to be called.

I'll be buying my second house in about two years. This is after a very bad time in my life where I spent a whole lot more money than I had. One day, I might tell the details. Once I have the two houses - I live in Dubai, and I live in neither house - I'll have only one relatively small mortgage, which I'll also work to pay off. I estimate in 3 years (5 years from now), I'll own two houses outright and be paying cash for the third.

I don't count my bonus in this equation, so when I get that, it will only accelerate the above plan. It is conceivable that I'll own three houses in three years, and possibly as many as 6 when I retire. That's outright, with guaranteed income, even if I have only 3 of them rented out. I will not be underwater, in fact, I'll have equity and probably growing equity because I now know how and where to buy houses.

This last is also a point against your method; what if the buyer buys in the wrong area? It is likely two "bad buys" and he'll not get enough rent to cover the expenses, but he'll still have the mortgage, taxes, insurance, PMI, and maintenance. Plus he'll be underwater. Once again, bankruptcy will loom.

My method guarantees me three or four rental houses upon my retirement. I won't have any mortgage payments. I'll have my investments for income or large purchases, and my rentals for monthly income. If I have no renters, I can always sell.

No, I'm not there yet, but I definitely will be. As Dave Ramsey says, "Your income is your greatest wealth-building tool." I'm using that tool to leverage my investments. I'm not using borrowed money to do so.

I'm glad your method worked out for you, oldguy, but it is not wise investing. It is gambling. It works when it works, but if borrowing to buy one house is good, why not borrow to buy 100? or 1000? If you're going to gamble, go big! Or is there a limit to the 11% versus 3% you're always touting?

Either it is expandable to larger investments, or it is an unreasonable gamble. My method works and continues to grow arithmetically. Your method is not realistically scalable. This in itself tells me that it is not a safe investment.
Post Mon Apr 01, 2013 3:22 am
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oldguy
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quote:
Either it is expandable to larger investments, or it is an unreasonable gamble. My method works and continues to grow arithmetically. Your method is not realistically scalable. This in itself tells me that it is not a safe investment.



Wino - here are 3 guys that are doing it on a scale such as you propose (I'm not one of them). Actually, they have contacted some of us smaller landlords with offers to buy our houses. They bring their own financing/inspections, etc - but the offers, as you would expect, are low.

quote:
So far this year, metro Phoenix’s three biggest housing investors have purchased more than 3,000 homes and continue closing deals. Those three largest investors, according to an analysis by The Arizona Republic, are:
Post Tue Apr 02, 2013 12:00 am
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Brownsfan2k5
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Are who?
Post Tue Apr 02, 2013 5:56 pm
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Wino
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Donald Trump recommends this method.

Donald Trump went bankrupt. I have no idea why banks started loaning him money again.
Post Sat Apr 06, 2013 10:07 am
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Brownsfan2k5
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Hey old guy. Do you encourage getting an LLC for property rentals?
Post Sun Apr 07, 2013 5:15 pm
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coaster
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quote:
Originally posted by Brownsfan2k5
Hey old guy. Do you encourage getting an LLC for property rentals?

A thread on this topic has already been opened. Please direct any responses on the topic of an LLC to this thread:

http://www.money-talk.org/thread23039.html

~Tim~
Post Mon Apr 08, 2013 12:36 am
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keganjosh
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The advantage of making money with a rental property is that you will get money month after month. Although some of this money will go to pay off the original mortgage, with a good rental property investment, you can practically count on a steady flow of income.
Post Tue Apr 09, 2013 8:21 am
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