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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
investment property-2nd property
Hi all!
Does anyone have any experience with buying a 2nd property as an investment property?
We bought our house a couple years ago & just refinanced.
Now, a 2 family home we used to live in just went on the market & we are thinking about buying it as an investment property. Plus, I am thinking the ground floor apartment would make a great new home for my studio that I want to open!
I know that things vary from state to state, but does anyone have any input as to where to begin with this? I was told we might have to put 20% down b/c it's a 2nd property. Does anyone have experience being a landlord? Does anyone want to talk some sense into me before we do something crazy!! LOL
Re: investment property-2nd property
I don't have first hand experience, but I don't think investing in property is ever really a bad thing. There are always exceptions, but it sounds like this could be good for you guys since you could use one space for your studio & rent out the other.
Just... never rent to family or friends. Even with a contract those always seem to get messy.
I have experience with investment properties (both my own, and my clients' properties), as well as with being a landlord.
I am not in the States, but I may have insight otherwise - What would you like to know?
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I have no experience - but I would certainly check out the rental market in your area to make sure you could collect enough rent money to cover the monthly mortgage and then some for costs like plumbing and whatever else could go wrong.
To me, the thought of being a landlord is frightening - but I'm a pretty low risk taker financially in gereral and don't even own one home.
not always true...an old boss of mine was contemplating bailing out her son, who bought a duplex for a rental but was not able to rent it out. One of my cousins also had a rental property - b/c she got married and moved in to his house. She had horrible tenants who didn't pay the rent and wouldn't leave. She had to get a lawyer and foreclosed (she may not be the best example b/c she never wanted to be a landlord, but got stuck unable to sell). I also know people who are doing great b/c of rental homes, but certainly do your research and make sure you won't be screwed if you have to cover that mortgage for a couple months!
From what I have seen doing title insurance, lenders usually require at least 20% down and the interest rates usually tend to be higher than home mortgages (but I think that just depends more on how your bank is treating you as a customer). Keep in mind the tax consequences (sometimes can be good, sometimes not...as the interest and depreciation is tax deductible off the income of the tenants but not the principal). I have encountered many clients who had bad luck with tenants but of course its only when they need a lawyer that they come to me. Remember that repairs can be a pain, collecting rent can sometimes be a pain, as well as getting rents who totally trash the interior (which you often don't know until they move out). If you or DH are handy with repairs and don't feel you need to invest much to make it rentable, it may be ok for you.
Also ditto pp about rental market in your area. Around here, there are a lot of vacancy signs on apartments and houses because everyone was getting home mortgages the last few years, even ones who really shouldn't have qualified. As such, the market is a renter's market for the most part. Oh yeah, and always have a good lease, as well as printed rules.
That's why I said there are always exceptions to the rule. I know plenty of people who have built lives/careers on investment & rental properties. I also know people who have had nightmare tenants, that's why you have to research your area, go into it with a business mentality, & make sure you have yourself protected.
There are horror stories in every venture. Sometimes it's worth the risk and sometimes it isn't.
We live in Westfield, MA. Home to Westfield State "University" (in quotes b/c it just became a university recently-I'm used to still calling it College). The area that the property is in is populated mostly by college students.
Honestly, we already have a friend in mind who needs an apartment with cheaper rent. & again, the bottom portion I am thinking of using as my studio.
Is it true that you need 20% down for an investment property?
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I owned a home and then DH and I bought a house together, so my house is now an investment property... soley because there was no way I could sell it and make money. So I rent it out. I will say being a landloard is not all it's cracked up to be. Aside from having to put a large amount down (you can't get a "traditional" type mortgage), you need to have some reserves.
For instance, I am loosing money on my house every month, because the rent isn't equal to the mortgage, but it was a better bet for me to hang on to the house for a few years and wait the market out. So not only am I loosing money, but I also have to make sure we have savings for us, and for if something goes wrong on my house. If I need to replace or repair or whatever. I do have panic moments where I just think that phone will ring and that my renters will be calling to tell me that this broke or that broke or the roof needs to be replaced.
Now the finance/money freak that I am says... investing in property is good. If you do your homeowrk.
I'm a landlord, but it was my house then we moved. I also worked in the mortgage indrusty in the past. Normally you have to put more down and the interest rate is more on a non owner occupancy home.
I agree with pp. Research your tenants and make sure you have money to cover incase your tenants dont pay or something needs replaced in the property.