How To Buy A Rental Property

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[tl]

I love Dave Ramsey but this advice honestly makes zero sense.
We have a rental home, paid for, that we clear $1000 per month. Using his advice, it would take me over 10 years to be in the position to purchase a rental house.
In our area, Austin Texas, house prices are increasing by the minute.
Just my 2 cents.

[rabarjamal]

I have been saving like a madman for my first rental property its getting there so slowly and painfully but I WILL get there eventually.

[georgievvladimir]

What about the thing the rich dad said: "It is fine to have some debt in case somebody else is paying it.". In this case the tenants will pay the mortgage.

[peterjanis]

This is a loan on an appreciating asset where somebody else pays. This is safer than a standard mortgage a homeowner has

[JonSchoeller]

I like when I tell someone to buy a house for cash and they look at me like I have 4 heads and a tail. I have bought 14 houses for cash. I didn't "buy" as young as some of my friends in their early 20s because I spent that time living well below my means and savings. They are only 10 years into their 30 year mortgages and I am debt free. Worh it.

[AlexSanchez]

Bought my first condo cash. And recently bought a house with my mom (1/2 and 1/2) both cash. Both rentals. It’s a good feeling knowing that you don’t have a mortgage and almost all the income is profit. Especially at the age of 24 :)

[davidjacinto]

I disagree with this.I have rental properties. I paid my first one off and I regretted it. I could have used that money to buy two or three properties that would cash flow a lot more than just one.

[CDCOZY]

This isn’t viable sorry 😐 unless you wanna wait 10 years for every property 🤷🏻‍♂️

[gnollio]

The biggest risks of using debt are vacancy costs due to market over-supply or a recession such as 2008. The benefits of using debt are economies of scale when working with management, greater tax deductions (depreciation), and most importantly the profit from appreciating property value if you choose to sell the home. Owning the property gives you financial peace of mind while leveraging debt provides bigger potential gains.

[mahadism]

Does this man realize houses go for 200-300k ++++ nowadays?

[MizAlexandria]

This is unreasonable for where I live average home prices are 400k. It would take almost 15 years just to save up enough out of pocket. I was able do first income property mortgage free because I inherited it and did the conversion to an apartment complex and renovations out of pocket. Now I intend to use the equity to buy another which will essentially pay for itself with me only having to invest 20-30% cash. I’m not crazy about debt but I do believe I’m using it as leverage.

[mabelw]

All advice is situational... dave advice is great! But you must apply it to ur own situation and abilities n honestly y not invest with someone else? To be successful u must learn to deal with others well (renters, partner etc) no one has all abilities

[mikeharris]

It’s amazing to me that so many people believe tenants pay their rent on time all the time and never damaged the property.

[rsolutions]

Buying a rental property with 100% cash doesn’t work for 99% of Americans. By the time a person saves (being as though most people, well off or not, live paycheck to paycheck and have debts), it could take decades of sacrifice and saving to get there. Why should someone wait 10 or even 5 years to achieve their dream of being a rental investor? I have two small multi-units in a major city and while I agree that it’s better to not have the debt, that debt, if done correctly, will pay off itself through tenant rentals. I don’t think the risk-adverse way Ramsey proposes necessarily works for savvy, forward-thinking investors. I am moderate with money investments but I also I believe in order to achieve our financial dreams, we have to take risks. This is one of the best risks to take...so I totally think it’s fine to take out a mortgage to achieve that end. Granted you will want to put something down and see some sort of ROI end of month. It’s important that you educate yourself and think strategically with real estate, but you don’t have to limit how you get there.

[goldeninvestor]

Dave has a comfortable life mindset. Not a generational wealth mindset.!

[mrpinkpony]

At the current price of homes/multi family I don’t see how anyone can afford to buy and rent out and come out with a profit.
After mortgage, taxes, utilities, maintaince, hoa (condo) what are you left with????
Unless you own the property outright, it’s tight

[Bluewh]

For an investment property, should we avoid apartments or condos with HSO fee and stick to a single family home?

[Gamerz]

I would say rental property loan depend on cost and location. 500, 000 loan or half down isn't a lot when other areas you could get 5 homes at 100k. 500k would take awhile and be difficult to make more than minimum payment.

If you can buy a property at 100, 000 put 50% down and charge tenant slightly more than the monthly bank payment amount, You would start seeing profit as long as you had a tenant.

And you might need to reread that when thinking charging tenant more than you owe on payment, I'm not saying inflate costs, I'm saying with 50% paid off the house you don't owe interest as much, you have some income and can pay down the property.

[SD-gyeu]

I live in a place where homes cost $700, 000. No average person can buy multi family property’s at that price. If I have $100, 000 and I can put that down, and let my tennants pay my mortgage and I make $2, 000 profit what’s the problem with that?

[kevinrushing]

Yes, because we all know the best way to build exponential wealth is slowly and with 0 risk... come on people, think. If you save $200k over 10 years and buy 1 house with cash, I could have 10 houses by then with someone else paying for them.