rents would pay monthly mortgage and after some years u can get rid of this property with mortgage left and u will get the delta as your pure profit ?
2006-06-28 11:40:16 · 5 answers · asked by zapytanko 1 in Business & Finance ➔ Investing
When the market is going up you look very smart doing that. When it is going down you are in trouble, maybe in danger of going broke.
If you set your investment objectives a little less than "the max", then you will sleep better at night and be better able to survive the setbacks WHEN they come. Set up a line of credit on your residence, and don't use it except for emergency cash needs. The first objective is survival. If you survive, then you're likely to make good money investing in real estate over the long haul.
Best of success.
2006-07-05 08:49:35 · answer #1 · answered by Thinker 5 · 1⤊ 0⤋
It depends on what you're going to do with the money you're not spending on a down payment. If you save that money and use it for emergencies, then you're OK. That extra 10% down isn't going to change your monthly payment that much but that extra 10% in your bank account will help you out when you have renters that don't pay or vacancies.
Although, if your property declines in value and you have a high LTV to begin with then you'll run into problems when you go to re-fi. If, however, you get a fixed rate and have a long time frame that you plan to own the property it will, most likely, appreciate in value. It's time in the market that matters most, not timing the market.
You could also get an Option ARM loan to help with your cash flow. True, if you use the minimum payment you'll have deferred interest but, again, it extends your time in the market.
And, you'll have to have to be able to absorb the negative cash flow each month. Because at a high LTV you won't be able to cover the mortgage, taxes, and insurance with just the rents. If you could, then why wouldn't your renters buy at 100%. But, after time, rents go up and your mortgage stays the same (fixed rate loan) so that down the road you can get some positive cash flow.
If you're buying in CA, look me up tom4loans@sbcglobal.net
2006-06-28 19:37:24 · answer #2 · answered by Tom S 3 · 0⤊ 0⤋
you are an idiot, you want the LOWEST mortgage, because after you add property tax, maintenance, landscaping, etc... the market rent is not going to cover your monthly expenses.. try to earn POSITIVE cash flow, not negative dipsh!t
2006-06-28 21:03:11 · answer #3 · answered by DeveshPatel 2 · 0⤊ 0⤋
No, not smart. Not all tenants pay rent, and if you have too thin a margin, you'll lose everything, including the house you live in.
2006-06-28 18:43:01 · answer #4 · answered by Anonymous 7 · 0⤊ 0⤋
i know this from personal experience, when you have mortgage, property tax, and any other fees such as assciation... it will be near impossible to have tenants pay for this cost... not a smart move.
2006-06-28 18:56:13 · answer #5 · answered by Anonymous · 0⤊ 0⤋