SAN ANTONIO, TX · Member since 2018 · 7 posts · 2 votes
Hello everyone i'm new to BP!!! I am planning to buy my 1st house in San Antonio, Texas once I get out of the military. My question is if I put a down payment on a house say 20% and it's not completely mine yet. Am I able to rent it out to tenants right away? Or is that illegal in certain states? Or does it need to be 100% paid off? Thank you to those who reply. Cheers
- You plan on paying a large down payment to the current owner and the current owner will take payments for the remaining balance
If this is correct, this is called owner financing and it is a great way to buy property
Depending on your negotiation with the current owner, this type of deal could be set up in several ways, I definitely recommend working with a good title company, they can help you and the current owner set up the right documents
yes, you can typically rent out a property purchased like this
And, if necessary, and you qualify for a mortgage, you can go to a bank and refinance the property to pay off the current owner
In this type of a deal, the current owner is holding the mortgage note and you make payments to them, not a bank
You own and operate the property how you want to, and if you don't make your payments they can foreclose and take the property from you because it is your collateral for the loan
Owner financing is part of the private money market, so it doesn't show up on your credit report and tends to work well for most investors, if the terms are reasonable
@Fernando Villareal Yes. Many if not most rental houses have mortgages on them. There is no issue as long as you tell the mortgage company the truth about what you are going to do with the house.
Thank you @Account Closed I don't plan to get a loan or have a mortgage payment and pay the house off with a large down payment and the rest from my jobs streams of income. Do you think this a smart move? If all goes bad with payments(which I don't think it will) but there's a chance anything can happen. I can still get a loan from a mortgage company after the down payment right?
- You plan on paying a large down payment to the current owner and the current owner will take payments for the remaining balance
If this is correct, this is called owner financing and it is a great way to buy property
Depending on your negotiation with the current owner, this type of deal could be set up in several ways, I definitely recommend working with a good title company, they can help you and the current owner set up the right documents
yes, you can typically rent out a property purchased like this
And, if necessary, and you qualify for a mortgage, you can go to a bank and refinance the property to pay off the current owner
In this type of a deal, the current owner is holding the mortgage note and you make payments to them, not a bank
You own and operate the property how you want to, and if you don't make your payments they can foreclose and take the property from you because it is your collateral for the loan
Owner financing is part of the private money market, so it doesn't show up on your credit report and tends to work well for most investors, if the terms are reasonable
you may not want to hear this, but in almost all circumstance it is a bad move to rent out a fully paid off house. this is because leaving so much cash in the house reduces your return until almost nothing. this is known as your cash on cash return and is expressed as a percent. paying off a house gets rid of your mortgage payment, but because it takes so much cash to get rid of the mortgage, your % return gets extremely low. if you are interested in rentals to make a profit, I suggest you spend a significant amount of time here learning, before you purchase your first property. this is not just to learn about how to make money off rentals, but the many legal nuances of the business. you should also be fluent in your local landlord/tenant laws before buying a property, not after. good luck.
okay sounds good i'll will put more time to learn before buying my first rental. I do plan on having rentals to have an other source of income. @Andrew B. do you already have a few rentals yourself? Thanks for the reply BTW.