Anyone buy a rental property recently?

I'm looking at buying a rental property and was told by the mortgage guy that it would require 25% down. I understand rental/commercial property generally requires a larger down payment, but 25% seemed a bit much. Does anyone have any recent experience in this area that you could share? The last time I purchased a rental was 17 years ago (dear Lord I'm getting old!). Thanks.

Re: Anyone buy a rental property recently?

Any thing beyond your primary residence is going to cost you more in the begining. I have flipped couple houses, and always had to pay more for the down.

Re: Anyone buy a rental property recently?

I haven't bought one in a while, the last one in '06. I've always had to put down 20% for a non-owner occupied residential.
I suppose 25% is not that hard to believe considering all the bad loans out there. I guess the banks need to be more assured the LTV ratio is kept down.
I did sell a couple multi-families in the recent past , and the buyers were at 20% down.

Re: Anyone buy a rental property recently?

Non-Owner Occupied in these times will cost you at least 20% down and a 3/4% or more premium on the interest. Also be prepared to present lots of documentation. They want to know where that down money came from. On the last house I closed on (July) they wanted to see every paycheck I got up until escrow closed. It seemed like every other day we had to fax some info that they wanted. It was like they were making it up as they went along.

It may be a lot of work but now is a great time to invest in Real Estate.

Will this be your first rental property?

Re: Anyone buy a rental property recently?

bucky7680 said:

Will this be your first rental property?

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No, I owned a duplex from 1992 through 2004. Wife and I are debating if we use some free cash to...

- pay down mortgage (boring and maybe not overly wise given low rates today; but practical and safe)

- buy a property (ROI is working out to roughly 8% to 10%, a bit more attractive than avg stock market returns, but there's the "hassle" factor involved w/renters, repairs, etc.)

- put the money in stocks (I think it will be a bumpy ride but in general I think they'll rise over the next 5 years or so; and it's certainly a low maintenance investment)

Our realtor has informed us that the lenders are indeed changing the rules of the game every week or so. If we dive in I guess we'll have to be prepared for the red tape.

Re: Anyone buy a rental property recently?

If you can keep repair costs and tenant turn over low you can make good money. Not great or easy money. We've done all right with all of our rentals. My wife handles the administrative side and I handle the repair/rehab and removing bad tenant side.

Re: Anyone buy a rental property recently?

the happiest day of my life, was when i got out of the rental business.

Re: Anyone buy a rental property recently?

tashasdaddy said:

the happiest day of my life, was when i got out of the rental business.

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I have to agree. Mrs Ken and I dumped our last one about 9 years ago.
Life got so much simpler then !!!!!

Re: Anyone buy a rental property recently?

Is running rental/lease commercial/business property easy or harder than multi family?
rob

Re: Anyone buy a rental property recently?

tashasdaddy said:

the happiest day of my life, was when i got out of the rental business.

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Amen to that. And now that the market has appeared to turned bull, I'm getting a very good return there - much better than I would expect from rental. And no phone calls in the middle of the night.

Re: Anyone buy a rental property recently?

Rentals seem to trade at a loss, and hopefully you sell with a capital gain in the future.
I have one....(to live in when I sell the business...which includes the house and land).

Returns from shares, managed funds etc, with their risks, costs, losses, and pathetic returns are as big a disaster in my mind.
Rentals are work, and risk, but you have control, and when things go pear shaped, it is your fault!!

The secret for mine has been....get the mortgage down so you trade for a profit, and that profit gets bigger every month. Get freehold.
As a businessman I always trade to pay tax (means I made a profit).

My advice to my kids has always been...."the best investment you will ever make is free-holding the home you live in"....of course they listen!!~
But if you do that, then all of a sudden you are driving the horse, not pulling the wagon.
Maybe you could do your sums on that one first.

Cheers
Phillip