Investment home to rent long term in Minnesota

Member since 2019 · 9 posts · 0 votes

With all the chaos going on, I was wondering if someone can help me out to make a decision to buy an investment home or not at this moment.

The idea is to rent it long term.

Interest rates are low and I want to take advantage of that.

Thank you so much for your advice!

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Tim SwierczekPro Member

Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes

@Account Closed are you asking if its a good time to get started? I think the answer is yes if you protect yourself. few considerations are:

How's your job? Is it stable and likely to continue during the crisis and beyond?

I think the most critical protection is cash reserves if you are house hacking you will be paying rent anyway so I think the amount of reserves you need is lower but still present.

Find a deal that does not require a lot of cash.

Contact @Jordan Moorhead and watch the market video on his Facebook business page from Thursday 3-26-20

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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Account Closed are you asking if its a good time to get started? I think the answer is yes if you protect yourself. few considerations are:

How's your job? Is it stable and likely to continue during the crisis and beyond?

I think the most critical protection is cash reserves if you are house hacking you will be paying rent anyway so I think the amount of reserves you need is lower but still present.

Find a deal that does not require a lot of cash.

Contact @Jordan Moorhead and watch the market video on his Facebook business page from Thursday 3-26-20
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Adam TafelBusiness Member
Real Estate Agent · St. Paul, MN · Member since 2017 · 593 posts · 403 votes
6y
@Account Closed - do you have a specific property in mind, or are you just beginning the process?

The search for an investment property typically takes 3-6 months, so there's no reason not to get start the process. I'd recommend meeting with a lender if you haven't already, @Tim Swierczek ^ is a great resource. You'll get a full understanding of your purchasing power and financial position.
It also doesn't cost anything or require any commitment to start looking at properties. There's a chance you won't find a deal that works until later in the year, when life is (hopefully) back to normal.
Only you can decide when you're ready, but thats my 2 cents. Welcome to BP!
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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Account Closed Assuming you would you be living in the property? And, that you can afford the payment without the use of rent, then I would say 3 months of the full payment, if you need the rent or a big portion of it to make the payment then 6 months would be enough in my opinion.
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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Account Closed I do think it's possible and I expect it's likely during the virus scare, but as soon as certainly exists I think it's 50/50. Most people would say that housing prices must go down, but that is anecdotal. Look at the data below. If you remove the one recession that was caused by housing then housing increases in value 80% of the time during a recession and decreases slightly 20% of the time. If this was not such a freak situation I would say it's going to go up, but the virus and how it impacts us is a great unknown. I believe real estate is a long term play if you buy a good deal that is long term cash flowing property in an area that is known for appreciation you will be fine regardless if prices drop a bit in the next 12 months. We had a property it was underwater in the last crash. In 2016 it had a bunch of equity. We cash-out refinanced and bought another rental with the proceeds. We sold both houses last year and cleared over 200K between the two. Respect the uncertainty of the market and protect yourself is my advice. I'd be happy to meet on a zoom call if you want to chat, then PM me.
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Adam TafelBusiness Member
Real Estate Agent · St. Paul, MN · Member since 2017 · 593 posts · 403 votes
6y
@Account Closed said - can you afford the payment on your own? What do you currently pay in rent, would it make a big difference if you were temporarily responsible for the full payment?
There's definitely a possibility that home prices will go down, there always is. If I bought a 4-plex today at 400k, rented it out, and it appraises for 350k next year, am I going to be concerned? Probably not, I just want it to provide income. Timing the market is an impossible task. The government has put a series of protections in place to protect property owners, in an attempt to avoid a housing downturn, which makes me optimistic for the future.
That being said, we are living in a strange time. I think it's highly unlikely that home prices will increase dramatically in the next 6 months, and there will always be future opportunities. Don't make a decision that's going to keep you up at night - ask advice from the experts and make an informed decision.
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