Re: New and need Suggestions - Posted by Nathan
Posted by Nathan on November 03, 2001 at 19:11:39:
First thing there are many things to take into consideration in this business in order to make a profit. One needs to know is what is the PITI(Principle, Interest, Taxes, Insurance) cost? Once you know that, you will need to know what is the average rent for that size house in your area. Do Not go on what you feel, research and be sure of the Rent Factor in your area. Rent Factors change in different areas of the same city. Many want-to-bes have drowned for not knowing the facts. Your Rent will need to be $150/mo.(minimum if not $200/mo.) NET(after PITI) over what you are paying(its called Positive Cah Flow), and the BIG QUESTION is can you get that much. If not GUESS who gets to pay it? That’s right YOU!!!
Another thing I would not rent it out, because then YOU are RESPONSIBLE for the repairs, this can eat you up. Lease/purchase it to a tenant/buyer and write into your contract that Tenant/Buyer is responsible for all repairs.
JohnBoy is correct about you need to know if the current loan is 30-yr. fixed, and is there a balloon in the loan to blow up in your face? Is the loan CURRENT? Or, BEHIND?
Next what kind of Deposit are you planning to get? Fact= get 5% of the retail price, and make it NON_REFUNDABLE.
This way you are creating a front end profit.
Many of us out here have taken Real Estate Investing courses, and they help provide all this information you need to be considering, and the forms you will need to transact this deal. I have found in my life time that it is easier to read and succeed, than to stubble out there and go bankrupt. There is a lot to this business, and it would be to your advantage to learn more before you dive in with no knowledge.