All Forum Posts by: Byran Parson

I have a rental property that is paid off, worth about 60k.  Rent is 700 a month.  Taxes and insurance total about 125 total a month.

I am considering taking out a 25 year mortgage on this property, at 4.5% with the rate changing every 5 years.  Closing costs would be around 1000 dollars.

The bank allows 80% LTV which would be 48k available for use.

If I take this 48k and invest in 3 additional properties that meet the 50% rule along with the $100 per door rule, I could cash flow 4 properties (total) that follow the cash flow rules just mentioned.  I can buy 3 properties with these houses being bought for between 40k-55k.  I cannot go over 55k if I want to follow the aforementioned cash flow rules, with the market rents being what they are, in my area.

Anyways, does this sound like a good deal(s).  Any thoughts appreciated.

actually i calculated incorrectly. the mortgage (p&i only) is 240. rent is 725. the mortgage is 33% of the rent. so it should cash flow 122.50 per month.

Tell me if my calculations make sense as im thinking about buying a 50k sfh rental. I buy house for 50k. put 10k down on it. 2.5k closing costs. 12.5 total cash investment. No immediate repairs needed. It will rent for 735. When following the 50% rule, it will cash flow around 60 dollars a month. That is 800 a year. So my return on investment would be: 800 cash flow yearly 3% property appreciation=1500 yearly principal paydown=600 yearly total yearly=2900 2900 divided by 12500 = .23 23 percent total return.

Our market rents for a SFH in our rural town is 800 a month. So after taxes, insurance, I'm probably clearing 500 or slightly more.

How much liquidity though?  How can one figure out what is appropriate?

Well, maybe you're right. If I HELOC-ed the paid off property, I could expand my return on another property. Good point. Hmm.

I don't feel comfortable doing a HELOC. I want my PITI to remain below 50% of my rent income. With a HELOC I would certainly be over that amount.

Joe, a conventional lender won't give 10 loans if the properties are cash flowing well (over 50% of PITI)? Over the course of 10 years?

I have a plan that I'm throwing around.   I currently own one rental property that is paid off.  Cash flowing around 500 a month.  I have a primary residence, house is worth 135k and I owe 65k.  My current income is around 80k, and I'm able to save around 30k a year.

I was thinking about max-ing out my ROTH IRA, but after fees I will average around 5% over time. If I do real estate buy-and-hold it may be more like 10%.

I am able to afford to buy one rental per year, putting around 30% down on each property. I can cash flow about 50% of the PITI on properties, with these numbers. Long story short, I will be financing 70% on these properties.

If I buy one rental per year, for say, 10 years, will I be overleveraged? It sounds like a good long-term plan on paper. But in reality, I have no idea. I will be using a property manager on these properties (and still cash flowing 50% or more of PITI).

Anyone else?