a land lord question about selling and renting houses?

Question

if you put down a 25% down payment on a second house
do you still have to use the money that your tenents give you for the mortgage on the house or on your self?

Answer 1

If you put 25% down on a rental house, presumably you have financed the remaining 75% of the purchase price with a loan on which you'll have to make monthly payments. You have to make that payment regardless of any rent you receive. For example, if you have a monthly mortgage payment of $1000, and you receive $900 in rent, you can apply the rent toward the payment, plus you'll have to pay another $100 out-of-pocket. If you receive $1100 in rent, you can pay the rent and have an extra $100 in residual income. And if the house is vacant, you'll have no rental income that month - but you'll still have to cover the $1000 mortgage payment out-of-pocket.

Bottom line - the bank that gives you the loan considers how much you'll be receiving in rent when they give you the loan, but once the loan has been made, they don't care where your payment comes from - as long as they get paid.

Answer 2

You can use the money they give you for whatever you want. Some money from somewhere must make the payments or you will lose the place.

Answer 3

It's your money, use it for whatever you want. Rent has nothing to do with mortgage. As far as the tax man is concerned you have to report it as income.

Answer 4

I'm not sure what you mean. Its your money to do what you want with. If you mean what would be the best way to spend the money it depends on your investment interest rates.

Answer 5

the idea of buying rental property is to invest for the future. buy as many as you can over the coming years. then when you can retire, you can do so in style. home in Florida, one up north when it gets to hot in the summer. play golf everyday, work now---play later.