Like many other young folks entering their career field, I'm going to be looking to buy a house within the next few years. Actually, I'll be looking to buy one as soon as I get a fulltime job. Interest rates are so low and my credit rating is so good (its better than both my parents and almost any other adult I know, randomly), that I don't really need to save up before getting one.
BUT
Instead of buying a house and then moving, I'm going to excersize a LOT of self control and patience, and I'm going to rent it out. I'm going to own a home, but keep living in this trailer.
I did the research. The mortgage payments would be about $800/month on a $120,000 home. 120K isn't too nice, but it isn't crappy. In a normal neighborhood that would be two bedrooms on the main level and a finished basement, approx. But, that same amount of house RENTS for about $1000/month.
So, you're essentially gaining $200 a month and getting a house (and more importantly all the equity in it) for free.
You put $10,000 down, so you owe $110K. Next year you owe $109, and the house is worth 124, or so. Next year you owe 108, and its worth 128. Next year you owe 107, and its worth 132. So after three years you have $15,000 worth of equity in a home while putting $0 into it yourself.
You can then draw on that $15K to get a home equity loan for that amount. Then you put that money down as a down payment on two more 120K houses, and start the process over again with both of them.
It would literally take like 10 years to have five houses with at least $30,000 in equity in each. So that means instead of drawing loans for 15K or 20K and buying a house or two, you can draw loans for fucking $150,000, as a downpayment on a 24plex small apartment building, or a commercial venture, or something.
and after that its all gravy
~~~~~
Yes, I know it isn't as simple as all that. You won't have renters all twelve months of the year, so you need to plan on making the payments yourself at least three months of the year, for one. That's why I'm not going to be doing this until I have a fulltime job. Since someone else will rent the house and I live in the trailer, I'll have a couple thousand dollars a month to just throw in the bank to buffer me against the possibility of having to make those payments myself for a while.
You also build that contingency into the rent. If the payment is 800 a month but they pay you 1000 a month rent, that means you're already "safe" to pay for three months' mortgages yourself, should you have to.
There's also house upkeep, possibly replacing the kitches or appliances or whatever. Again, since my OWN fulltime money isn't going towards a home, that frees up some of my money to keep the first house and the following ones rentable, until the ball picks up steam.
BUT
Instead of buying a house and then moving, I'm going to excersize a LOT of self control and patience, and I'm going to rent it out. I'm going to own a home, but keep living in this trailer.
I did the research. The mortgage payments would be about $800/month on a $120,000 home. 120K isn't too nice, but it isn't crappy. In a normal neighborhood that would be two bedrooms on the main level and a finished basement, approx. But, that same amount of house RENTS for about $1000/month.
So, you're essentially gaining $200 a month and getting a house (and more importantly all the equity in it) for free.
You put $10,000 down, so you owe $110K. Next year you owe $109, and the house is worth 124, or so. Next year you owe 108, and its worth 128. Next year you owe 107, and its worth 132. So after three years you have $15,000 worth of equity in a home while putting $0 into it yourself.
You can then draw on that $15K to get a home equity loan for that amount. Then you put that money down as a down payment on two more 120K houses, and start the process over again with both of them.
It would literally take like 10 years to have five houses with at least $30,000 in equity in each. So that means instead of drawing loans for 15K or 20K and buying a house or two, you can draw loans for fucking $150,000, as a downpayment on a 24plex small apartment building, or a commercial venture, or something.
and after that its all gravy
~~~~~
Yes, I know it isn't as simple as all that. You won't have renters all twelve months of the year, so you need to plan on making the payments yourself at least three months of the year, for one. That's why I'm not going to be doing this until I have a fulltime job. Since someone else will rent the house and I live in the trailer, I'll have a couple thousand dollars a month to just throw in the bank to buffer me against the possibility of having to make those payments myself for a while.
You also build that contingency into the rent. If the payment is 800 a month but they pay you 1000 a month rent, that means you're already "safe" to pay for three months' mortgages yourself, should you have to.
There's also house upkeep, possibly replacing the kitches or appliances or whatever. Again, since my OWN fulltime money isn't going towards a home, that frees up some of my money to keep the first house and the following ones rentable, until the ball picks up steam.
