All Forum Posts by: Zeeshan Mallick

If you don't mind my asking, how did you become a partial owner for close to nothing down?

@Paul Welden

1. The minimum amount of time I would like the property to be rented for would be 9-12 months

2. The tenants will be responsible for all utilities.

3. Ideally, I would like to say that the tenants are responsible for the damages, and I will cover this legally.

Around July 2020, I am planning on purchasing my first rental property.

-The rental property will be near Arizona State University (one of the biggest universities in the country)

-I am paying for the rental property with a 3 % down payment 

-My monthly payments will be high due to low down payment and PMI payment

-I plan to rent by bedroom, rather the entire property to, for example, a family. This is because rent by bedroom makes more rental income

-I plan on being the landlord for the property

Near this university area or right outside of it, I am looking for a 3, 4 or even 5 bedroom house to make a rental property. However, because my monthly payments are so high due to the low down payment and PMI payment, a 3 bedroom is usually a negative cashflow or BARELY breaks even monthly.

However, with a 4 bedroom and especially a 5 bedroom, I see quite a positive cashflow each month, with each bedroom being rented out to a single person. So it is evident that a 4 bedroom and 5 bedroom will do better for monthly income, regardless of the higher home price.

However, I have a few concerns that I would love opinions on:

-Is it being too idealistic to assume I can rent out a 4 bedroom and 5 bedroom house in this area?

-Will there always be an element of vacancy I will be fighting due to the large amount of bedrooms?

-Is it unrealistic to assume that these houses will always be rented out?

-Am I in over my head with trying to take on the difficult task of renting out a 4 or 5 bedroom house, and should just stick with a 3 bedroom house for safety, regardless of the rental income it brings when compared to the 4, 5 bedroom houses? Due to this being my first property.

All opinions and guidance/consideration is greatly appreciated.

I live in Tempe, Arizona, which is the city of one of the largest universities in the nation (ASU - Arizona State University), however, very near to me (15 minute drive) is Scottsdale, a very affluent, popular, and relatively affordable suburbia.

My question is:

For my first rental property, a single unit house, in general, would it be better to get a Tempe house for the college student rental demographic, or a Scottsdale house for the small family of 3-4? Both houses would cost rougly the same in this situation.

Because the way I see it is a Scottsdale family will rent long term hopefully (5-10 years) while a Tempe College student will only rent for 1 year maximum as they will just live somewhere else the next year due to semester changes, graduation, roommate situation etc.

I just don't know which situation is more advantageous and easy to take advantage as an investor, because I would imagine that it would be quite annoying to find new tenants (especially college students) every year, however it also seems that it would be hard to find a long term renter in Scottsdale. 

Any ideas or advice is greatly appreciated.

Hello,

I am looking to buy my first rental property via house hack when my lease expires in July 2020. Because a shortage of initial funds, I am going to put a down payment via 3.5 % FHA Loan. However, I have a few questions on all the upfront costs for obtaining a property this way:

Upfront Costs (as I understand them) :

-FHA down payment (3.5 %)

-Closing costs

-MIP ????

I have been hearing around the internet that if you pay a down payment of 3.5 %, you have to pay an upfront MIP cost when buying the property. Online I have read the following definition " MIP stands for mortgage insurance premium and is required to close an FHA loan. It is paid as an upfront cost and as an annual premium"

I am a bit confused, because I thought the PMI is the monthly amount you pay because the loan is under 20%, is there also an upfront MIP you have to pay? Then on top of that, do you have to pay an MIP amount each month as well as a PMI amount?

Kevin, 

Thank you, that clears things up for me. Because I will be using this property simply for monthly cashflow it seems like the rise and drops should not concern me. Thanks for the info. It is just a bit scary as a new investor to get my feet wet because every dollar means a lot right now; but I need to do it.

@Aaron K,

Thanks for the response. As a newcomer to real estate investing with limited funds, do you suggest that I just bite the bullet and go in on a property that cashflows in July 2020? Or should I wait till I see a drop in market value for homes in my area? I want to make the most financially advantageous choice, and I understand that there may be a decent amount of risk.

Hello Everyone,

This is my first post on BP, as I just made my account a few moments ago, so please excuse me if my forum post is not formatted correctly.

I am looking to buy my first rental property around July 2020, however I am a bit reluctant because there is one scenario that kind of scares me.

Let's say I buy a rental house for $275,000 in July 2020.

3 years go by and as I am paying principal and gain equity on the house, I have accumulated, say, $30,000 equity on the house (sorry if this is not a realistic number, just for sake of example)

But let's say that the housing market crashes or takes a dip from 2020-2023 and the value of this rental home dropped in this time period from $275,000 to $195,000.

What exactly would happen to my equity in the property because of the drop in market value of the house? Also, would I still be paying a mortgage worth $275,000 if I did a 30-year-fixed mortgage back in 2020? Is this a realistic scenario, and would it even effect me negatively if at the end of the day if I am simply just trying to cashflow each month from a rental?

I know it is seen as trivial to try and time the housing market, but a scenario like this kind of scares me because I am young and inexperienced. But my question is, is this even realistic, and if it is, would it even effect me if I am just trying to cashflow off rent each month?

Sorry in advance for my ignorance on the subject and thanks in advance for guidance and consideration.