I'm a novice at investing in real estate. I'm trying to build passive income for my retirement years as I have kind of lost faith in the whole 401k thing. I've actually taken the hit of cashing out my retirment vehical (with penalty) and invested in single family homes. Currently I have two homes and am looking to purchase the third. One of my rentals is currently completely paid off. My question is after I purchase my third rental property I will be out of liquid capital. I would like to continue to grow my small yet blossoming plan. What can I do from here to continue to grow?
Any suggestions will be greatly appreciated.
Best regards !
You could refi the free and clear house and use that cash as down payment to the next few houses. You could bring in a few partners (like minded people). You could buy houses using owner finance. There's nothing that limits you from buying more except your knowledge. You expand your knowledge, you buy more houses.
Thank you VK for your response and insight. You most certainly are correct. I will definetly need to educate myself.
I was also interested in a home I located that was for sale by owner. From what I could tell the home looked in good shape and was move-in ready (Although I would have to verify this impression). The property was also significantly less expensive than comparable properties in the immediate vacinity. I informed my realtor but she warned me to stay away from homes that are for sale by owner because I would have no protection. Any insight on what she is worrying about, or why one should "stay away" from homes that are for sale by owner?
@Maxwell Grimm you can cash out refinance your property that is free and clear and use as down payments for more property.
How much are you putting in your houses?
We put as little in the houses as possible with the goal that the tenants pay the houses off. Therefore your key is to evaluate your goals regarding financing. Some people are comfortable being mortgage to the hilt and other aren't or don't have time (i.e. retirement now and need the cash flow).
If you don't want to remortgage than the next thing to do is live frugally and maintain your business numbers "tight" (take care of the houses but minimize "wasteful spending" than reinvest those earning into future homes.
The rent I collect more than pays for the mortgage payment and I've owned the properties for a few years now. I decided to pay off one of the homes, with the idea of using the collected rent from that home to pay down the mortgage on the second home. I was hoping to gradually create a "snowball" affect collecting and paying off properties.
I'm only in the beginning stage of my plan and I know this stage will be slower until I can build more momentum. I'm a novice and am just fishing for ideas on ways to steadily build that momentum.
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