A young 19yr old college student wants to embark into real estate?

Question

I live in a small town. Recently I was looking for houses for sale and I dont have a lot of money. There is a house I was interested in renting out that is priced at 29,900. It is located in an average neighborhood with nothing elaborate. This house has 2 bedrooms and one bath is already being rented out to a long term tendant. The monthly rent is at 430.00 and with 6,000 dollars down and a 30 year 6 percent interest rate, im looking at mortgage payments of 184 dollars a month. Would this be a wise decision to purchase this house since it is already occupied. Does this sound like a sound deal?

Answer 1

What are your monthly payments PITI?

Don't forget you pay real estate taxes, insurance, principal and interest, in addition to upkeep, maintenance, and repairs.  Older homes need repairs, appliances need replacement, etc.  And do you have sufficient income to qualify for a mortgage as a college student?

And what if your tenant stops paying you?  Loses their job?  Trashes the place, moves out?

Seems to me, that IF you can afford it, you'd be better off starting with a home/condo you can occupy, renting out the second BR to another student.  You will have more control over the house then, and you have to live somewhere.

Answer 2

Being a landlord isn't necessarily a good deal.  You are going to be responsible for repairs and getting them done asap.  You will also have to deal with damages that your tenants might do to the house.  As a student I doubt you have the time to make sure that the property is well maintained, nor do you have the funds to have someone else do it.

Answer 3

There are a lot of "depends" to that question. How handy are you? Do you have cash on hand should something major need repair? Can you afford legal advise? Also, in the event you would need to sell this home, is it a home that could be sold quickly or would it sit on the market for a long period of time? If you renter moved out, would you be able to continue making the payments if you weren't able to rent it immediately?

There are a lot of variables ... most to which have to do with if you are able to handle it financially. If so, go for it.