Investing in Rental Property advice?

[Julie Akeens]

23 years old.

Just moved to Houston, TX. I am attending UofHouston and have a 9-5 job as a housekeeper at a hospital.

I am a Marketing Major... I want to get into Marketing/Advertising but it's going to take me 4 years to complete and I'll be 27 years old by then (feel old to be in college) decided late plus after high school I had to work to support myself.

ANYHOW enough of the background.

I'm looking to invest in rental properties so I can have money coming in --- create a saving strategy and eventually quit my job in the next year or so. And repeat the process... with commercial buildings.

I just bought a house in Cleveland, OH (Hometown) for $7,500 it does need repairs but only cosmetic... no pipe damage, no electric damage or anything like that... I am looking at $3,700 in repairs and my Dad and uncles are contractors and will have the house together in no time. The neighborhood is decent ---- it's not a suburban area... but it's not bad. It's livable and really doable... the crime isn't bad in that specific area.

Well, my goal is to have it ready by February... if I start working on it next month.

I didn't take out any loans... I saved up $15,000 in one year... from budgeting and savingup my pay checks and stashing my tax return and my school refund. Therefore, I don't owe anyone any money (Thank God).

I'm working on building my credit as we speak... which will definitely be needed soon.

Any advice on this??? Does this sound like a good plan as a starter?... Spot any mistakes? I'm open to any advice...

 

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[Jamesdoesmith]

having actual hard cash is a great great thing and shows alot on your discipline. That is not easy to do. Always be careful doing business with family. check out bigger pockets . com and find some really really good info there. make sure to screen your tenants. Also look into every single large and small tax break for owning a home. plan for vacancy.

 

[InstantNoodles]

I would look into an FHA or similar loan. You only have to put down 3.5% for the downpayment.

 

[Even Steven]

First off, kudos for planning ahead and being disciplined enough to save money. That's a good start.

I have some reservations about a house that can be bought for so little, but I'll assume for now that the house is rentable.

Do you know what other comparable houses or apartments are currently renting for in that same area?

 

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[biophase]

I would look into an FHA or similar loan. You only have to put down 3.5% for the downpayment.

Can you even get a loan for $7500?

 

[biophase]

23 years old.

Just moved to Houston, TX. I am attending UofHouston and have a 9-5 job as a housekeeper at a hospital.

I am a Marketing Major... I want to get into Marketing/Advertising but it's going to take me 4 years to complete and I'll be 27 years old by then (feel old to be in college) decided late plus after high school I had to work to support myself.

ANYHOW enough of the background.

I'm looking to invest in rental properties so I can have money coming in --- create a saving strategy and eventually quit my job in the next year or so. And repeat the process... with commercial buildings.

I just bought a house in Cleveland, OH (Hometown) for $7,500 it does need repairs but only cosmetic... no pipe damage, no electric damage or anything like that... I am looking at $3,700 in repairs and my Dad and uncles are contractors and will have the house together in no time. The neighborhood is decent ---- it's not a suburban area... but it's not bad. It's livable and really doable... the crime isn't bad in that specific area.

Well, my goal is to have it ready by February... if I start working on it next month.

I didn't take out any loans... I saved up $15,000 in one year... from budgeting and savingup my pay checks and stashing my tax return and my school refund. Therefore, I don't owe anyone any money (Thank God).

I'm working on building my credit as we speak... which will definitely be needed soon.

Any advice on this??? Does this sound like a good plan as a starter?... Spot any mistakes? I'm open to any advice...

Good thing with paying cash is that you won't have negative cashflow. I'm guessing this place rents for $500-$600? You'll get a decent return on your money with numbers like those. Not much downside as the most you can lose is $11k. You can make all your initial capital back in 3 years and then rest is free money.

 

[Chazmania]

Great job man - you can compound the cashflow from that thing with your savings from other earnings and then buy another and keep repeating until you have a fat income stream. That's exactly what my wife and I are doing. Buy cheap for cash, get repaired and rented, bank the cash and scale it up. Good for you dude you're on the right track. Whatever other business ideas you focus on as time goes by you'll always have that lovely rent hitting your hand every month.

 

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[Chazmania]

Sorry I think I assumed gender there without reading your screen name lol! You are certainly making a very good move for your future regardless of young old male female etc.

 

[Bila]

1- Have the tenants pay a deposit on damages ( it will be an incentive to be careful )
2- do not rent your property with appliances ( a mistake i did ) too much hussle for the repairs, and if there a damage ( dealing with a water damage from a washer at the moment in one of my properties ) your insurance will be the one charged ( deductible ...etc)

 

[Bila]

Will think about other things to add

 

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[IceCreamKid]

I have a ton of systems in place to keep my rental properties relatively hassle free.

A few off the top of my head...

1. Do not rent include appliances with the home. You want the type of tenant that is willing to stay in your property for years. This tenant will have no problem providing their own appliances. The goal is to minimize vacancy here. Vacancy is EXPENSIVE.

2. Have them pay for the first $100 of any repairs. Some tenants hate the thought of their landlord making a profit so they decide that it's a great idea to break something every other week. That won't happen if they pay for the first $100.

3. Make your rental applications extremely picky. The low quality tenants won't bother filling it out and weed themselves out from the application process.

4. Charge an application fee to eliminate time wasters and tire kickers. Again, you only want the best tenants who will stay in your home forever.

5. Automatic withdrawal of rent each month.

I only do this for SFH. I'm not sure how well it works with apartments.

 

[Bila]

3- Always make sure to know where they work ( and ask them to notify you if they change ).... In case of a damage or claim ... You want that info so it will be deducted automaticly from their pay cheque after a judgement in your favour, without that info, iyou have a judgement in your favor, but cant do anything .

 

[Jamesdoesmith]

buy near colleges and hospitals

 

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[Jamesdoesmith]

Also, check out the site cozy as they auto process rents to your bank accounts. no PO boxes or paper checks. just boop click and its there.