Are rental properties good investments?Do the banks take into consideration the rents when applying 4 mortgage

Question

Anyone on here make a killing in real estate? Where do you start. Flipping homes or renting them out???

OK one more question before choosing best answer!!

I'm looking at a $75,000 duplex... Tenants have been there 3 years. I've been approved for a 25 yr. mortgage at 5.2%. Now I can put 15000 down making the mortgage $60,000. Both are rented at 500 per month and they pay their own utilities.

What do you think? Good investment??

Answer 1

I've done both,,,owned/rented/flipped. Being a landlord isn't exactly what I'd choose for a career again though. Buying, fixing and flipping is my choice now.

A killing,,,hmmmm,,, I'm sure some investors are, but please don't listen seriously to infomercials.

Banks, or lending institutions care about 1 thing,,,well maybe 2 things. The real value of a property to them, and your ability, and timeliness in paying the loan.

Rev. Steven

Answer 2

I don't think most people really have what it takes to be a landlord. It's really tough to get the property to cash flow unless you've owned it for a long time. There is a huge gap between rents and what a mortgage would cost on that same property right now. As for the income from the property to offset the mortgage payment, mazziatplay is incorrect. Here's Fannie Mae's underwriting guideline for using income from an investment property even if you have no experience:

"When the rental income relates to the security property and the borrower has no history of receiving rental income from the property, the lender must document the rental income by obtaining an appraiser's opinion of market rent and, if applicable, copies of the current lease agreement(s). The gross rental income from the property will be equal to the lesser of the market rent established by the appraiser or the current rent based on the existing lease agreement(s). Net rental income will equal 75 percent of the gross rent; the remaining 25 percent of the gross rent is absorbed by vacancy losses and ongoing maintenance expenses. However, when the borrower has a history of receiving rental income for the security property, the lender must document the rental cash flow by obtaining copies of pages from the borrower's most recent two years of signed federal income tax returns and the related Supplemental Income and Loss (Schedule E to IRS Form 1040). The lender should then analyze the borrower's rental cash flow and calculate the net rental income (or loss), making sure that depreciation or any interest, taxes, or insurance expenses were added back in the borrower's cash flow analysis."

The rest would bore you.

Answer 3

Rental properties can be very good investments if you are prepared for the responsibilities of being a landlord or have the ability to do most renovation work yourself and can qualify for the financing.

Fannie Mae guidelines require that, unless you have had previous land lord experience, you must qualify to make the payments without consideration of the rental income.

If you have had landlord experience you may be given credit for 75% of the rental income. (Fannie Mae uses a 25% vacancy factor for rental income).

Answer 4

FLIPPING IS ONLY GOOD IN A GREAT MARKET OR IF YOU GET THE PLACE DIRT CHEAP AND RENOVATE IT UP TO THE CURRENT SELLING PRICES....RENTALS ARE LONG TERM CASH FLOW...GENERALLY A GOOD IDEA IN A GOOD LOCATION.....LOCATION.....LOCATION...

Answer 5

there's no money in rentals