Best Interest rates or Investment ROI?

[Maverick21]

Should you finance all your houses, part of the house, or none of the house? I have a son in the oil field he's working really hard and I'm trying to talk to him about investing in rental property. We would probably have to go in partners, possibly on lower end homes. Just not sure what the market is like and the return percentage would be.

I'm curious how you all view the finance part of this as well. I'm sure most of it depends on how deep your pockets are but my initial thought would be to at least put down 20% to avoid PMI. With interest rates as low as they are I wouldn't be in too much of a hurry to utilize my capital to get one house paid off when I can have five 20% down payments to get five units going. That is unless the mortgages are different when not purchasing for your own personal dwelling (that aspect I am unfamiliar with as well).

 

[FullAuto]

I'm curious how you all view the finance part of this as well. I'm sure most of it depends on how deep your pockets are but my initial thought would be to at least put down 20% to avoid PMI. With interest rates as low as they are I wouldn't be in too much of a hurry to utilize my capital to get one house paid off when I can have five 20% down payments to get five units going. That is unless the mortgages are different when not purchasing for your own personal dwelling (that aspect I am unfamiliar with as well).

With 1 house paid off, you can use it for a line of credit to make cash offers on future purchases. Buy in cash, then when you fill them and they show income, refinance to pay off your line of credit. The catch is, you must buy the houses in a manner that they will appraise for high enough that when you refinance at 80% LTV you can still pay off your line of credit without coming out of pocket. If you do miss that number, you may come out of pocket some, but hopefully not the full 20%.

I do lower end houses. The cheapest house I've bought was $29,900 and the most expensive was $47k. I try to buy around $40k so I'm in them less than $60k when they are fixed up. Rent is $650-$795. Mortgages are $214-345ish/month on 15 year loans. I did put 20% down on those though. Future purchases will be done using the line of credit method I mentioned above.

 

[1krr]

New guns and old cars!

 

[BobBarker]

Probably buying stripped lowers, pmags, and low end complete ARs and waiting for the next event/presidential election.

I like rental properties, too. Things that you can look at and should always have some value.

 

[-Pjackso]

I'm interested in this also.

For the landlords, what's your ideal renters and how do you screen them? (to avoid problem tenants)

...Any other investments?

 

[Texican]

Based on today's interest rate, I like the "mason jar buried in the back yard" savings plan. It's more secure than the bank versus the .1 (Yes that's 0.1 not 1.0) percent interest rate.

Thank Greece and with your deposits not considered money on deposits any move, the worldwide banking industry take depositors money if a bank fails to pay off the bank's debts....

Make you feel safe and secure????

 

[Shadowrider]

Depends on what your strategy is. If you are looking at long term dividend plays are the way to go. Now for my sob story.

Back after the last real crash I had money to invest and couldn't for the life of me find a single stock I wanted to invest in and that applied to ANY sector. Just out of happenstance I stumbled across a MLP that was paying a 25% annual return. I did some research and found out that it wasn't BS, that it was in fact a very well managed company that had been around awhile. Yes they did accumulate debt to finance their projects and expansions, but ONLY after they had sold the capacity of those projects and had contracts in hand. So I put in some on it. So....since about 2007 I have been getting a 25%+ return, through dividend reinvestment I've added 50% to my unit holding. And.... I bought at around $14 per unit (shares really, they just call them units when it's an MLP), today the stock closed at $67.41. So do the math on that one. Had I had any inkling of an idea that it would go that way I would have literally mortgaged my house and went all in. Had I just invested all I had at that time I would be living on a mortgage free lakefront home on Grand lake complete with dock, boat house and gate code. Yes the whole "diversity thing" bit my ass hard on that one. I still hold this stock, it's my crown jewel...

 

[CHenry]

Toss a dart at any SP500 stock/mutual fund and toss in $100 a month. You'll out do those land lords in 30 years.

 

[OKCShooter]

Toss a dart at any SP500 stock/mutual fund and toss in $100 a month. You'll out do those land lords in 30 years.

Wanna bet?

 

[CHenry]

Wanna bet?

No cause your never wrong.
I have done rental houses, Its a lot of work and can be profitable but my SP stock did 35% last 18 months. I have no debt involved. I didnt have to clean up after old renters. I win.