Originally posted by "MikeOH":
Brandon,
I did it and I didn't find it extremely difficult.
Many times, the "gurus" are trying to sell their expensive bootcamps, courses, and mentoring. Who would spend thousands of dollars for a bootcamp that told them to borrow the money from their local bank? On the other hand, newbies by the thousands will pay big bucks to get "insider secrets know only by the rich"! Guru courses almost all have one thing in common, the promise of some "secret" that ordinary mortals don't know, but can be revealed for the price of an very expensive course, bootcamp, or mentoring.
The truth is that operating rental properties is a very simple business. There is no SECRET. If you simply learn the basics and follow those basics, you should succeed. Unfortunately, the majority of new landlords never get the basics and simply don't make it. The gurus aren't going to sell many $5,000 saying that!
Mike
I definately agree with you about the Gurus; I am very sceptical. Here is the section I was referring to if you care to read it, sorry about the type-o's...
"In addition, to be credit-worthy enough to get an institutional investor loan, as described, you must also have enough outside income. That means that you must make enough money to support the investment.
But, you may argue, the investment is going to support itself,. If I buy a rental house, the rental income will pay for PITI. That's better than an owner occupant who will get no income from the property.
So you say. But lenders say otherwise. They want you to qulaify for the investment property just as if it were a property you intended to occupy. And that gets a little bit difficult.
The reason is that you are already living somewhere and are paying rent or mortgage payments. Now, when you want to buy an investment property and get an investment loan, your home payment became an expense. If the basic qualifying formula is that income must be three times payments(the actual formula is close to this), that means you need to earn much more income to qualify for the investment mortgage. "
He goes on to give this example:
Home mortgage 1,000 month (which is what I pay)
to qual for it at 3x you need 3,000 month income (which I do make)
Rental property 1,000 month
Again you need 3,000 income, but you no longer have it because 1,000 got subtracted to pay for your mortgage. Now you need 4,000 income to qual even though the rental property produces 800 month(200 negative).
However, lenders will only count 75% of your rental income, 600 dollars, leaving 25% for expenses, vacancies, etc...."
Now to answer my own question, he is showing the property as negative $200 cash each month, but as you mentioned, you should be making a better decision than that, and having a pos flow. Assumably, enough to make up for the 25% deduction the lender takes for misc. expenses.
Thanks for reading my short novel.
Brandon
