Still a Renter, investing in Rentals
I am renting. It would seem that Renting is a polarizing issue among Real Estate investors. Being new at this, and working towards selling mobile homes, preferably in a mobile home park, I do plan to move into the park itself in a quality unit of my own. What do you think of renting while building up to your first investment? Do you think your first investment should be a house of your own? Do Flippers rent? I feel as though, given time, seed capital could be raised more quickly for the park if I was to buy a small home of my own for the interim.
Most Popular Reply
If you're basing that question solely on the Kiyosaki idea that a house is an expense, I would say don't buy into the nonsense.
Run the numbers and see if it makes sense.
How much are you paying for rent? How much would you pay if you owned and were living in one of your own deals. In my area, if I took one of my bread and butter deals, my payments (mortg, taxes and insurance) would be about 1k/mo. My rent would be 1,400. So why in the world would I rent? Rent is a far bigger expense than owning.
Now if you live in California, that may be completely different. Rent may be 3k but to own the same thing, you might have to pay 5k/mo. Then I'd say rent.
One other reason why it may make more sense to own than just going beyond the numbers - the use of owner occupant financing. One of the absolutely best ways for beginning investors to start building a portfolio is by house hacking. As an owner occupant you can get access to super low money down financing that let you buy a house with relatively little money out of pocket.
And better still is that you can then turn around and get a heloc on that house (ONLY if its your primary residence though) at up to 90% LTV. I recently got a heloc on my primary at 100% of the appraisal value. 100%......
So keep that in mind as well. If you were to buy a 150k for say 100k and put in 10k in rehab, you could then turn around and get a heloc on that house for 25k that you could then use for more investing. Buy your second house and move into that as your primary and rent the first and do it again.
To those gurus who suggest that owning is an expense and renting is good, I would suggest that some of them try getting a heloc on the house they're renting and see how that goes. :-)