# Owning Rental Property



## crussell (Mar 12, 2018)

Curious if anybody has some advice on owning rental property.

So I'm 29 years old, bought my current house almost 4 years ago. In that time, I've done quite a bit of work updating the house, inside and out (not just the lawn!). Since buying, the market around here improved. I refinanced last year beyond the 20% equity needed to drop my PMI, which was nice. The house has turned into what I think will be a nice rental. (3 BR, 1.5 Bath)

Anyways, work will be bringing me out of town this summer. I'll be a few hours away from home, and staying in company provided housing M-F and probably driving back home for the weekend.

I've had a goal of buying a second house, which is easier said than done. My mortgage lender said the best way to secure a second mortgage, is to have a rental agreement signed and in place, along with proof of damage deposit, first and last, etc.. and they will recognize that as income when approving your next loan. I once got a piece of advice from someone I've known to be pretty successful in life, and that was to set yourself up to buy a house every 5 years. This sounds very ambitious, but this has stuck in my brain.

Now that I will be gone for the next 5-6 months, this seems like a perfect time to take the leap as I can get a renter situated while I am out of town. I of course will be homeless on the weekends, probably crashing on my dads spare bed, but I can deal with that! The end goal would be shopping for a second home towards the end of the year.

Does anybody have any words of wisdom as I head down this road?


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## Movingshrub (Jun 12, 2017)

I'd suggest

http://lmgtfy.com/?q=%2Bsite%3Abogleheads.org+rental+property


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## dfw_pilot (Jan 28, 2017)

I think you meant advice, not advise, but I'd also check out BiggerPockets for great, reputable info.


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## crussell (Mar 12, 2018)

dfw_pilot said:


> I think you meant advice, not advise, but I'd also check out BiggerPockets for great, reputable info.


Dangit - Good catch. I wrote this before heading to work, hadn't quite had my coffee yet.

Thank you both for the reading material, this looks helpful.


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## OD on Grass (Nov 1, 2018)

dfw_pilot said:


> I think you meant advice, not advise, but I'd also check out BiggerPockets for great, reputable info.


+1 on the bigger pockets recommendation. Amazing!

Yes, having a renter in place will make it easy to get another mortgage. I haven't had a problem getting mortgages without renter in place though. It all depends on your debt to income ratio. I have found that small local banks are the best to work with. You will hear people talk about a number of mortgages that you are limited to but my local banker says she will keep loaning me money as long as I keep renting them out because me debt to income ratio will still look good.

The first deal is the biggest. You learn SO much. They even talk about that on the most recent bigger pockets podcast.

Real estate is amazing for wealth building. I encourage you on your journey.


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## jdc_lawnguy (Oct 30, 2018)

My two cents is either be close or find a reputable property manager. I have owned house hundreds of miles away and learned the importance of having a good property manager and having a better BS meter.


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## 440mag (Jan 29, 2018)

My stepdad was R. J. Coates and he had a dozen rentals close-by for many, many years in MD. He did ALL of the repairs, improvements, remodels - that man could do it all. He was literally a rocket scientist at Goddard Space Floght Center where he was a primary in the Crustal Dynamics Project (https://www.cambridge.org/core/services/aop-cambridge-core/content/view/BC228D858AC87DD2557D945AFE60BD03/S0074180900134928a.pdf/div-class-title-the-crustal-dynamics-project-div.pdf).

All this is lead up to something he said many, many times: he ... barely ... broke ... even ...

I wish you the best of success but, I did evictions for a couple years as a Sheriff and I always had an immense amount of respect for anyone crazy or brave enough to be a landlord!

Gimme the stock market, any day!


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## dfw_pilot (Jan 28, 2017)

440mag said:


> Gimme the stock market, any day!


Yes. Buying VGSLX is about as easy as it gets.


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## crussell (Mar 12, 2018)

Thanks everyone for your input, and the resources you have shared. I have read quite a few of the Bigger Pocket articles and they shed a lot of light on the world of property management, both good and bad.

I am really struggling to reach a confident decision. I seem to be equally torn between what I feel is a great long term opportunity, and significant doubt that the timing is right.

Someone I know if very interested in renting my home, and they are someone I would be very comfortable renting to.

My fear lies on the financial aspect... My original game plan was to begin renting my house over the summer while I'm away working in Seattle, with the intent of purchasing a second home later in the year. However, the market prices in our area continue to grow, and we have very limited inventory. If market prices hold, the options are not favorable for a home buyer. I just don't know that the timing is right...

For anyone who is curious enough, search Ferndale, WA on Redfin or Zillow. Obviously we are not the most expensive area to live, but median homes are close to $400k. This is for your average home, most need updating, and so far nothing stands out as a smart long term purchase.

Anyways, I am still putting a lot of consideration into this but I want to feel confident that I am setting myself up for success.


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