Comments on: How Do I Prepare for a Real Estate Opportunity? https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/ Earn, Save, and Live Joyfully. Tue, 19 Nov 2019 18:10:24 +0000 hourly 1 https://wordpress.org/?v=6.8.3 By: Nick Name https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/comment-page-1/#comment-607 Mon, 12 Nov 2007 21:40:00 +0000 http://www.onefrugalgirl.com/?p=254#comment-607 Questions for Frugal Girl:

Do I want to own and manage another investment property? – Think of this as a lifestyle and time-management question.

What is the Return on Investment (ROI) for my current property?

What would the ROI be on a second rental? – consider that you could rent it out for the whole season, and not use it yourself at all.

What is the ROI on my stock portfolio?

When considering ROI on real estate, consider a *leveraged* ROI. ie: A $40,000 downpayment on a $200,000 property is still only a $40,000 investment. – don’t forget your closing costs.

DO NOT pay down a mortgage that is 4.875% You will never find money that cheap *ever again*. If you don’t believe me, Google “should I pre-pay my mortgage”.

What is my debt to income ratio for the prospective rental property and for the portfolio as a whole?

What is the LTV for the portfolio as a whole?

If I don’t rent for my target rents, and I have to discount my rent, can I still pay the debt service. – I find the important question is usually not “Will this rent?” but “Will this rent for $ X ?” Usually, if you discount *enough*, it will *always* rent.

Am I ok with this risk?

Personally, I love rental income and property management, and do not mind the associated risks. But first and foremost it is a matter of lifestyle preference.

Have fun at the beach!

]]> By: One Frugal Girl https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/comment-page-1/#comment-475 Mon, 03 Sep 2007 04:02:00 +0000 http://www.onefrugalgirl.com/?p=254#comment-475 Limeade — That’s exactly how we figured out whether or not we could afford our first beach/vacation home. We calculated rents, mortgage payments, utilities, etc and determined just how much we could afford. In the past we also placed stink-bids on properties in the area. We’ve never attained a property this way, but you’re right, you never know how low a seller is willing to go.

]]> By: limeade https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/comment-page-1/#comment-474 Mon, 03 Sep 2007 00:59:00 +0000 http://www.onefrugalgirl.com/?p=254#comment-474 One of the things I’ve found with those who invest in real estate is that they don’t necessarily wait for an opportunity, but they create an opportunity.

You can find out what the current rents in the area are and figure out what all the associated expenses are and then you can figure out what the maximum amount you can offer is.

Even if your offer is quite low, you never know what may be accepted until you try.

Nice blog by the way.

]]> By: One Frugal Girl https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/comment-page-1/#comment-470 Sat, 01 Sep 2007 16:27:00 +0000 http://www.onefrugalgirl.com/?p=254#comment-470 You are absolutely right about not counting on rental income. The income from our rental home at the beach only covers 6 months of the mortgage. Add on another 6 months of mortgage plus utilities and you quickly realize that we bought the home because we love the beach not because the house pays for itself.

As for the issue of three mortgages: we could pay off a good portion of our first mortgage, but the interest rate is so low that it just doesn’t make much sense.

]]> By: green3 https://www.onefrugalgirl.com/how-do-i-prepare-for-a-real-estate-opportunity/comment-page-1/#comment-468 Thu, 30 Aug 2007 19:51:00 +0000 http://www.onefrugalgirl.com/?p=254#comment-468 I would be very leary to pick up a third mortgage unless the deal was VERY good and the potential to rent the place was VERY good. If you bring enough income each month to pay for all three mortgages on top of your expenses – without relying on any rental income, then go for it. But very few people can afford three mortgages at once. If the place doesn’t rent as expected, you’re in trouble.

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