07-07-2019, 09:00 PM
So first just to address this, the house will not be a rental property immediately. It will be lived in for at LEAST 3-5 years before I decide to start renting it/selling it. That will allow me time to pay a good amount off (High down payment + high monthly payments on the mortgage). Plus renting out rooms to friends while I'm living there as if we were all renting together.
So sounds like a couple of things,
If I want to buy in with another person, to double the downpayment, then maybe forming an LLC is the smartest. Then it starts looking like tax codes for LLCs might be an area to look at, anything about deducting property losses/interest. I'm going to start an LLC in the next few weeks and try out property management, just to see what my taxes will be like in 2020. Then I'll know for sure how to file on my own, all the exceptions, and if I still think it's a good idea to buy a house like that.
Maybe buying something that needs a little freshening up here and there. I really don't want to spend all my weekends doing this house DIY. But I'll put in a good amount of work with the goal in mind of having the house stage-ready on a budget. If the house seems like it needs a lot of work, get a contractor to estimate on a second walkthrough, then double the price. But look for open floor plans that can be easily customized/modified in the future to fit demands. That seems like it will add value as the house becomes desirable to more types of families/people.
Getting the license probably isn't worth the time and effort, especially with knowing some realtors myself. Didn't realize there are little "sales" that allow you to reduce this cost significantly. I might look into it still if anything just to get the knowledge of the real estate market. Hell, may even find a class at JMU about it.
Make the cost of the monthly bill with all included, less than 30% take home rather than gross. That will let me build up a larger liquid savings account for any home repairs.
I did an investment calculator on putting 30k down, then $1,500 (monthly mortgage estimate) per month for 20years, and at 8% compounded annually. This would get me $1,000,000 by the time I was 42. So..I need to do some math and see if this house situation would pay off as well. May not be fair to assume though because if I wasn't paying $1,500 to the mortgage, then it would go to rent and therefore couldn't be saved in this hypothetical million dollar IRA.
Question though: Even if you have the option to do a 5% downpayment, wouldn't you want to put as much as possible down to avoid paying interest on the amount financed? Or am I missing something? My thought process is put as much down as possible while still keeping enough of a saftey net (6-9months of income at least), so that you can pay less interest and therefore pay off the loan quicker.
Also, what are y'all's opinion on where the overall market is headed? I do worry it's nearing the top again, and don't want to buy right before a major drop. But I also don't want to pay rent for 1-3 years while I wait for the market to adjust, because that loss might be the same as the new lower price of the house.
So sounds like a couple of things,
If I want to buy in with another person, to double the downpayment, then maybe forming an LLC is the smartest. Then it starts looking like tax codes for LLCs might be an area to look at, anything about deducting property losses/interest. I'm going to start an LLC in the next few weeks and try out property management, just to see what my taxes will be like in 2020. Then I'll know for sure how to file on my own, all the exceptions, and if I still think it's a good idea to buy a house like that.
Maybe buying something that needs a little freshening up here and there. I really don't want to spend all my weekends doing this house DIY. But I'll put in a good amount of work with the goal in mind of having the house stage-ready on a budget. If the house seems like it needs a lot of work, get a contractor to estimate on a second walkthrough, then double the price. But look for open floor plans that can be easily customized/modified in the future to fit demands. That seems like it will add value as the house becomes desirable to more types of families/people.
Getting the license probably isn't worth the time and effort, especially with knowing some realtors myself. Didn't realize there are little "sales" that allow you to reduce this cost significantly. I might look into it still if anything just to get the knowledge of the real estate market. Hell, may even find a class at JMU about it.
Make the cost of the monthly bill with all included, less than 30% take home rather than gross. That will let me build up a larger liquid savings account for any home repairs.
I did an investment calculator on putting 30k down, then $1,500 (monthly mortgage estimate) per month for 20years, and at 8% compounded annually. This would get me $1,000,000 by the time I was 42. So..I need to do some math and see if this house situation would pay off as well. May not be fair to assume though because if I wasn't paying $1,500 to the mortgage, then it would go to rent and therefore couldn't be saved in this hypothetical million dollar IRA.
Question though: Even if you have the option to do a 5% downpayment, wouldn't you want to put as much as possible down to avoid paying interest on the amount financed? Or am I missing something? My thought process is put as much down as possible while still keeping enough of a saftey net (6-9months of income at least), so that you can pay less interest and therefore pay off the loan quicker.
Also, what are y'all's opinion on where the overall market is headed? I do worry it's nearing the top again, and don't want to buy right before a major drop. But I also don't want to pay rent for 1-3 years while I wait for the market to adjust, because that loss might be the same as the new lower price of the house.
Current:
13' E92 M3 Comp | 05' Yahama R6 | 95' E36 M3
Past:
14' BMW 335xi GT | 06' Porsche Boxster S | 15' Jeep Grand Cherokee | 84' BMW 733i | 85' Honda Shadow VT700 | 06' Acura TL