All Forum Posts by: Peter J

Ok - Did some quick math and with the 50% rule I can go with a $65k purchase price, rent for $1300, PITI would be $622. This makes for a 50% rule = to $28 and a 2% rule = to $65000. Or with a 50% rule a $45k purchase, $410 PITI, $850 rent = $15. 2% rule on this is $42,500 purchase price.

I've realized I'll need to purchase much cheaper properties to make these numbers work because in my area rent is very hard to come by much higher than $1300 on even a really nice property.

Do you guys find that the $50k purchase mark is about where the money is made? I think if I went below $50k here I'd end up putting at least $25k into fixing it up so I'd be back to a $50k investment price.

Well Dan, I've been looking for properties by actually driving around, as well as viewing realtor sites and craigslist. I have two mortgage brokers ready to act once I find a property and a realtor that is looking too.

I feel like I've done a good job on the search front but need more time to develop what I should be looking at so I may have gone into this backwards! Since Saturday I've turned my focus on finding a property that fits the 50% rule and haven't found one yet, been close but not luck. My initial searches were looking at $200k properties (duplexes) but I think I am going to look for SFR <$100k since that is the only way I'll ever make the 50% rule work.

Thanks for the warm welcome.

Kyer,

I'm from the Des Moines area too and am specifically looking to get into the buy and hold strategy. I currently am looking for that property that can fit the 50% rule that is so loved on this site. I've come close a few times and even put offers in on properties but have always come in too low which has proven to be a good thing because they weren't even close to meeting the 50% rule.
Where do the REIA meetings occur and how often? Do you know of any mentors in Des Moines that is willing to help teach a newbie?

My name is Pete and I'm looking to buy my first property soon. I've had the itch to do so for about 4 years but never had the guts to actually do it but now I'm going to force myself to do it. My experience is limited to real estate which is why I'm here asking questions and learning from all of you. My short-term goal is to buy my first property in the next 6 months and purchase another 2 or 3 in the next 2 years. My long-term goal is to cash flow at a level that will give me the option to do it full time. I hope to mee that goal in the next 5 years.
I'd ask anyone that has experience to help me learn the business and thanks to everyone in advance.

To answer Will's question, no I'm not entering into full-time landlording, I'm just gathering information and hope to buy my first property within the next 6 months. I have a fulltime salaried job that I need for cash flow and living expense reasons. My plan is to buy 3-4 properties (landlording them all) within the next 2 years. My long-term plan is to have the option to do the real estate thing full time but unfortunately I'm inflicted with conservativeness which makes me really slow to pull the trigger. I KNOW, I KNOW I need to get that out of my system to be in this business and I'm working on it.

I'll look into the REIA in my area and spend my free time looking.

For bank foreclosures, how do I get wind of those? Can I just call banks and ask them if they have any??

I have two banks that will do 10% down and one isn't even charging PMI and may not want to see reserves. I gather this is not the norm.

Is it normal to ask the seller to sell on contract and what is the likelihood they would?

I'm open to othe alternative ideas people have used when purchasing with little cash to do the down payment. If I do small priced units I'm able to do the cash but it seems those are hard to find and may need to do something around $100k minimum.

"Don't "buy cash flow" by throwing in a down payment. You won't get an investor loan these days with 10% down. Unless you are willing to put 20% of a purchase price in the bank at 0% interest, do the math assuming %100 financing, even if you end up putting in a down payment."

Jon- can you explain the statement above in more detail?

Where or how are most of these properties bought? Sheriff sale or bank owned?? the closest thing I've found is a property listed by the owner at $103k with a gross monthly rent of $1500. It's a 4 unit 1 bdr home. This would still cash flow negatively with the 50% rule. I'm not a realtor and new to the real estate thing so any tips you are willing to give a new guy would be greatfully appreciated.

Is it typical to have to put at least 10% down to purchase a property to rent? If so is there any other way to buy with nothing down? I'll be buying my first property so I don't have refi options or second lien options either. I have access to a line of credit to pull the 10% but don't want to because that payment is so high it will make the property very hard to cash flow. I also have a partner that I can use that can provide the money down but ideally want to do this solo and not worry about a partner. I'm sure there are people out there that will lend me the money as a private note rec. and if this is the only option to get 100% financing how do I go about finding these people and is there more risk in using a private party loan?

I realize these have been beaten to death on this forum so I'm not here to bring this debat back to life but do have a question.

I don't think it's possible to follow the 50% rule if you don't buy a property that isn't completely run down and in need of huge repairs. If this is typically the case then can a lesser amount be applied to this rule if a property is fairly new and not needing substantial repairs (thus the need for less than 50%)?

For example: I had a property valued at $250k but selling for $210k because it was bank owned and they just wanted to unload it. The gross rent is $2200 (duplex so $1100 each side) and the loan (10% down at 7% on a 30 yr fixed) payment would be $1621 PITI. This nets $579 which to me is great but applying the 50% rule means I'd actually be -$521 a month but the property is only 5 years old and has had the same tenants since it was built. Can't a mitigation be done to become okay with buying this property or is the rule pretty hard and fast????