Hi, I'm following the moderator's helpful template in hopes it will help stimulate discussion on how I can start a small business in rental/property management using my almost paid off primary residence. My primary question is what is the best way to leverage the house I have? What loan products are best suited for my situation/goals?
My and story: Establish small rental business that I can leave to my children. I’m 10 yrs from retiring.
Type of property: Single family home (s) or multi
Location of property: Texas, Harris County, Inside the beltway, College Station AND Italy
Purpose of financing: This is where I need help. Cash Out Refinance ? I have <$100k left on my current mortgage and will be paid off 09/2022.Would use the equity in my primary residence to purchase and rent single family or multi homes ($350-$450k
Type of financing sought: Not sure,.
Current or prior ownership of real estate: Primary residence in Houston, and Apt. in Italy
Occupancy: Investment with traditional long term leases. I rented the primary residence out for 7yrs when I was transferred overseas. The 2nd, could be rented and managed by my son. Perhaps when he is attending college at A&M? Also have a Vacation apt. in Italy that we would like to rent out as well for short term (AirBnB like)…maybe even buy another one?
Value of property at present and/or your offer price: $750k primary. Italy $200k
Current rents per month: $ Primary residence was getting $45,00 6 yrs ago
Fair market rents per month: $ same?
Down payment or equity: Prefer as low as possible. Buy and Hold
Source of down payment funds, if applicable: own funds, 401k or secured borrowed funds (HELOC, etc)
Income Source: Salaried – Long term stable job as an engineer
Gross monthly income (optional): $>200k
Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: $ 1000/month
FICO: Excellent, Credit issues: none
Additional details: Would like to make the business international in the long run. We may go overseas again and will use property managers to help us.
You've put yourself in an excellent financial position to acquire rental properties! I hate to see you refinance your personal residence since you've made so much progress. You could use a HELOC or 401k as a down payment for a short-term loan to purchase the property and add value. Once you have the property repaired & rented out, you can refinance into long term financing to get your money back. I see a lot of investors repeat this process over and over using the same funds.
@Calvin Holt awesome work setting you and your family up for success!
What do you mean by "small rental business"? Are you looking to leave them a certain cashflow or number of houses?
What are you hoping to achieve by leaving them the houses?
Hi Cameron --by business I meant that a certain number of properties would generate profit... I mean we need properties to make cash flow right? I'm not sure I am following the point of the question.