Quote from @Drew Sygit:
Quote from @Meara Trine:
Hello everyone! This is my first time posting, so please excuse my lack of knowledge. I recently discovered BiggerPockets and I am learning quite a bit from the podcast. My husband and I are in our mid 40s and looking to get into real estate investing. We live in Brevard County, Florida. Last year we sold our large home in Merritt Island, and purchased a condo for our daughters near USF in Tampa (no more paying for dorms) and a townhome for ourselves. We paid cash for both properties, we then took out a mortgage on our townhome to purchase a rental property (another townhome). Although two of the properties are technically paid off, all three of them have HOAs and only one of them is bringing in rental income. The rental income does cover the mortgage and the HOA for the rental, but it does not cover any taxes or insurance. Not sure if we should have gone about things differently, but there isn't much we can do about that now. We would like to try house hacking as our next move, but unfortunately there isn't a large inventory of multi-family homes in Brevard County, FL. We are currently looking at a rare Duplex that is listed for $420,000. We could move into it and rent the other side, but the rent definitely wouldn't cover the mortgage. It's also not in the best area. It has good bones, but would need some upgrades (flooring, appliances, cabinets, bathrooms, etc.). I'm just not sure what to do moving forward. I feel like we may have made a mistake getting three properties with HOAs, although we do save on insurance since the HOAs cover the roof and outside structure. Any guidance for a newbie just getting started???
A bit confused with your post.
1) What are your real estate investing goals?
2) How are we supposed to help you if you don't share your goals?
3) Appears your primary has a mortgage on it?
4) How does the rental income NOT cover the property taxes on the rental if there's no mortgage payment?
Going to guess you are mixing your properties together?
Primary: has the mortgage on it. You're paying mortgage, taxes, insurance and HOA.
- How much of all that will rent cover if/when you rent it out?
- What were your monthly housing expenses for the Merritt Island house?
--- How much have your monthly housing expenses changed?
Rental: no mortgage, but you took out a mortgage on your primary to buy it. So, after that mortgage payment, property taxes, insurance, HOA and 5% vacancy, 10% Maintenance - what's the loss each month?
Condo/Dorm: no mortgage, you're paying taxes, insurance and HOA.
- You already stated you bought this to avoid paying for dorms. So, why would you expect cashflow from it?
- How much are you really saving?
FEEDBACK: why would you mix all these property performances together?
Similarly, why would you expect to live in a duplex and have the rents from one unit cover entire ownership costs?
- You could have done that 10 years ago, when prices were suppressed, but should NOT expect that NOW
Again, what are your goals in doing all this?
Hi Drew,
I really appreciate your questions and comments. Below are my responses. I look forward to your response. Thank you for helping me.
1. Our real estate investing goals are to buy and hold 5-6 properties in addition to our primary residence and our daughters' condo (so 7-8 properties total). Ultimately, we want to receive passive income on those 5-6 properties in retirement. We don't plan on retiring until 2040 though, so we do have some time. We will always need a primary residence and we would like to let our daughter's stay in the condo we bought for as long as they want, so we do not expect any income from those 2 properties. I guess technically that makes them liabilities because we will be paying taxes, insurance, and HOA fees for both of those. Once our daughter's finish college and start their careers, they will take over paying for taxes, insurance, and HOA on the paid off condo, but it will remain in our name. That's probably 6 years down the road though.
2. Agreed, see above.
3. Yes, we took out a mortgage on our primary residence (that was previously paid off) to purchase our first rental. We only have the one mortgage and it is technically on our primary residence.
4. I suppose you are correct. I wasn't thinking of it that way. I was including the mortgage in my calculations since we took it out to purchase the rental. We receive $1925 a month in rent. Taxes, Insurance, and HOA cost $798 a month, so the rent covers that. The mortgage is $1390, so we are short about $263 per month if we include the mortgage.
5. If we were to rent out our current primary residence, we could probably get $2,000 a month in rent. Taxes, Insurance, and HOA would cost approximately $930. If I were to add in the mortgage there instead of with the rental, that would be $2320, so we would be $320 short...BUT we would be removing the mortgage from the rental calculation which would mean we would be cash flowing $592 from the rental. I hope all that makes sense.
6. We have 2 reasons for looking at the duplex. We need to move to that area for my husband's work and we like the idea of house hacking. I got the idea/expectation that the rent from one unit should cover ownership costs from reading books and listening to to the BiggerPockets podcast. I didn't think it was possible before that, but keep hearing that it is possible. I just don't want to make a big mistake. I honestly don't think it's possible in my area.
7. Again, our goal is not necessarily to cash flow now. We want to cash flow in retirement (2040). BUT, we also don't want to make stupid decisions and lose money either. Even in this forum, I've been told a wide variety of varying opinions. Some say to go slow, others to go fast. Some say to use debt to move forward, others to pay off debt. Some you should only purchase if you can cash flow, others say as long as you break even. It's very confusing.
