You know what kind of tenants end up renting a house like this? A 45 year old ex convict man married to a 21 year old stripper with 3 kids. This was a real application I got when I was renting a house.
Actually it's not in Denver Harbor... Closer to Kashmere Gardens... Do you make a good profit on your rental homes? Thank you
I believe the land alone is worth more than 28k. I figure I could rent it out for 675.00 make a profit... I don't really care about the house... I just want to keep someone in there... I think one day that area (Kashmere Gardens) will be the new Heights..
When they pay on time, very little. I've been trying to sell both places but the market is ****. you better be prepared to visit that house about once a week because either you'll be trying to get back rent or deal with a kid breaking something. do not rent to young and single people.
nope. Not even worth 7K. http://www.hcad.org/records/details...C2e%7CU%8A%7C%86%C0%AB%A8%AD%86%5E&bld=1&tab= If they pay you every month you will but expect some "low Income" tenants who pay rent for 3 months then "can't do it" for a following 3 months. maybe...in 2020.
Somebody help me understand housing costs in Houston: Buy at $30K Rent @$500 x 12 = $6000 ) tenant pays utilities PTax $750??? Insurance $750??? Net potential (before vacancy and headaches) $4500. Cap rate 15%? BTW -- the headache factor is HUGE here. As is vacancy and damage risk. I'm not suggesting OP buy this...in fact, if he has no property management experience, I'd strongly recommend he pass....just trying to understand the math.
There is a cash flow vs. tax profit question. First off the capital gain rate does not apply to rentals. It is subject to whatever marginal bracket you are in, plus if you make over $250,000 you will be subject to the new wealth tax on investment income. You also don't seem to be factoring in the cash out to buy the house and repair the house.
15% is 4500/30000. An annual return on $500/mth rent. I was looking at cap rate (or income before financing costs), which is how real estate returns are often measured. Not considering tax at all. I figure I must be missing a big expense here. (and the rent was low(ish) since I assumed he'd not spend too much on R&M).
So you are talking about ROI. Unfortunately that is not a feasible situation. There will be far greater initial investment, and operating costs involved.
The only way I made money was by tax write offs. Tenants lie. Tenats tear stuff up. Tenants almost always skip owing you money with a property that needs a bunch of cleaning/repairs to make it rentable again. I used to dread everytime the phone would ring because it was probably a tenant with a sob story or something broken that would cost me money. In my opinion, rental propery would be OK if you have enough of it so it is your full time job. Just having a few is like having a part time job with variable hours and pay.
You don't seem to be interested in advice, just reinforcement, but I'll try again. If you're looking down the road to future development/gentrification, then I'd wait until the area is closer to taking off; this is not a good market, and won't be for several years at minimum from what I can tell. You do not want the headache in the near term. I did this in the Heights before it boomed, only difference was I had 15 or so properties & had marketing/collections/legal people on call and did ~75% of the maintenance myself. Another thing to consider: when something *does* need repair (and it will, sooner than you think), you better know a thing or 2 about a thing or 2 or you will be completely taken advantage of by whatever on-the-cheap contractor you do hire.
Thank you all for the advice... I will not be buying this.. I will stick to flipping cars and selling things on Ebay on the side... Thanks Again!!!!
What about Section 8 housing? Couldn't he get it up to code for that, and have more security as far as payments go?
You can do what I did and hire a property management company to handle all the bull**** if you don't want to do it yourself. I couldn't sell my house after I got married a few years ago so I decided to rent it instead. I wanted nothing to do with being a landlord, so I hired a company to do everything for me. They found me a good tenant, did credit/criminal/background checks on him, got my house ready for move-in, and now that he's moved in, they do everything...all for taking 5% off the top every month. I opened up a separate checking account and they set it up to where my mortgage comes out on the 1st of every month and the rent is direct deposited into it. They handle all repairs and they don't even call me for anything under $200. Any other repairs, they have a contractor, but they ask me if I want to get any other bids before giving him the OK. I'm not making a lot of $$ but really I just wanted to get that house off my books, so to speak. My tenant is basically paying my house off for me. At the end of the year, I supposed I may pay myself a small salary with whatever is left over.
If OP still lives with his parents then this would be a great Independent learning experience. I bought my first house for $40,000 when I was 22 and it took a lot of work to make it decent. I slept on an air mattress for 6 months while fixing it up. I learned how to paint, tile, refurbish, install and do yard work while living there trying to fix it up. Buying a POS is not bad if you love to work and do things yourself.
