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Hey savers!
I did something crazy that I've been wanting to do for years. I bought my first rental property. I've been extremely chicken in this decision. I didn't want to invest far away since I wouldn't know much about the area and I'd want to keep an eye on it. I didn't want to invest in my local town either because I don't think the market's that great. So it has taken me way too long to get here, but here I am.
Finally, I found something I love. Due to some family connections, we were invited to purchase a new construction 4plex near where much of our extended family lives in a little college town that has really been growing and will likely only pick up pace now that it's big sister college is getting too full and even more competitive to get in. The 4plex is to be used as married student housing. There is such a need for married student housing there! We got all 4 units signed the week we listed and they were moved in the following week! What's more is there isn't a drop in rent prices or increase in vacancies during the summer like in other college areas due to the college's assigned 3 track system (3 semesters, the college chooses which is your "summer" break). If rent isn't collected, our management company has a deal with the college to withhold grades until we are paid. The two 4plexes on either side of our building are owned by my sister-in-law and father-in-law. My father-in-law lives close and checks in on them from time to time.
The margins aren't very great. It doesn't meet the rule of 1%, but it's not too far off either (0.85%). I think it would take stacked extenuating circumstances to loose money.
Anyways, I thought I'd share that big news as well as a spreadsheet I developed to analyse how long it would take to pay the property off.
Assumptions include:
profits rollover to paying down the loan (otherwise it's just the simple amortization you get from the bank)
you pay off the down payment loan first while paying the minimum on the mortgage
every year is like the current (no increasing fees or rent)
Here's the link: https://drive.google.com/file/d/15jO...ew?usp=sharing
I modified the numbers a little for privacy, but it's still pretty close to my loan information.
I did something crazy that I've been wanting to do for years. I bought my first rental property. I've been extremely chicken in this decision. I didn't want to invest far away since I wouldn't know much about the area and I'd want to keep an eye on it. I didn't want to invest in my local town either because I don't think the market's that great. So it has taken me way too long to get here, but here I am.
Finally, I found something I love. Due to some family connections, we were invited to purchase a new construction 4plex near where much of our extended family lives in a little college town that has really been growing and will likely only pick up pace now that it's big sister college is getting too full and even more competitive to get in. The 4plex is to be used as married student housing. There is such a need for married student housing there! We got all 4 units signed the week we listed and they were moved in the following week! What's more is there isn't a drop in rent prices or increase in vacancies during the summer like in other college areas due to the college's assigned 3 track system (3 semesters, the college chooses which is your "summer" break). If rent isn't collected, our management company has a deal with the college to withhold grades until we are paid. The two 4plexes on either side of our building are owned by my sister-in-law and father-in-law. My father-in-law lives close and checks in on them from time to time.
The margins aren't very great. It doesn't meet the rule of 1%, but it's not too far off either (0.85%). I think it would take stacked extenuating circumstances to loose money.
Anyways, I thought I'd share that big news as well as a spreadsheet I developed to analyse how long it would take to pay the property off.
Assumptions include:
profits rollover to paying down the loan (otherwise it's just the simple amortization you get from the bank)
you pay off the down payment loan first while paying the minimum on the mortgage
every year is like the current (no increasing fees or rent)
Here's the link: https://drive.google.com/file/d/15jO...ew?usp=sharing
I modified the numbers a little for privacy, but it's still pretty close to my loan information.
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