I want to get into buying houses and renting them out. Where do I start?

Question

I am a college student and wanted to get into buying houses and renting them out. To be exact I want to start small and buy a house in my college town and rent it out to students. Where do I start my research and learning? Any good books to read? Any advice will help and is much appreciated! Thanks in advance

Answer 1

go to real estate school

Answer 2

Figure out the cash flows so you know what you can afford.  Be conservative in the amount of money that you will need to put down, as well as your interest rate.  I would finance over 30 years, so that you have the lowest amount of debt to cover.  While a shorter amortization will result in you paying less interest, the primary concern is being able to cover the payments.  That's easiest with the lowest possible payment. Be sure that you factor into the payment your real estate taxes.  Add an extra 1% to the interest rate.  Also add in repair and maintenance costs, as you will likely buy something older that your renters could very well destroy (college kids seem to have a tendency for this).  

Apply for an FHA loan. That is for first time home buyers and has a good financing program, but I am not sure whether the program allows renters.  Call up a bank and ask for a mortgage specialist so you can find out, and they will give you some more numbers to work with.  You will have to know how much the bank is willing to fund, unless you have the cash to buy the whole thing up front.

Next, compare the rent that you would need to charge to cover your costs on the loan, taxes, maintenance and insurance.  Compare this to local rents to see if it is competitive. If it is not competitive, then don't buy the house. Chances are that it will go down in value anyways, in the current environment.

You will also need to talk to an accountant to find out how to set up a system to track everything.  You might even want to try to schedule a meeting with an accounting or finance professor at your university to find out about this.  I recall that my university had a finance class for real estate investments.

There are all sorts of online sources for real estate.  Go to Borders or Barnes and Noble to see actual books.  There are probably some informative Real Estate Investing for Dummies boooks.  Don't count them out due to the titles.

And when you go to buy a place, the best buys are the places that just need some cosmetic improvements, but are fine with respect to structure and systems.  They are cheaper because they don't show well, but paint and other cleanup can do wonders. Get a home inspector to look it over before buying though, and use the inspection report to negotiate the price down by saying, "it costs $6,000 to get a new AC unit and associated HVAC stuff, so give me $6,000 at closing".  Home inspectors cost about $500 or so.  

Answer 3

This is best time to invest in real estate market as every where in the world real estate market is felling heat.Go through the real estate related sites and start looking for good option over there.

Answer 4

There's a good book simply called "Landlording"

One of the first thing you'll learn is that being a landlord is like public relations. Need to be a good judge of people in order to choose good tenants.

If you're going to be in the business, get a real estate license and learn as much as you can as fast as you can. You can learn on the job, but it will cost you more than tuition.  

Answer 5

Start learning about the housing market.

It'll be cheaper buying houses right now since the housing market is in such a slump but renting it out would be a bit tough, you have to factor in your mortage, and to make a profit from the renting and damages it'll make during those years of renting...

Answer 6

Hi Dartmouth,

Did you ever think you were getting advice from people who know nothing about real estate?

The best book ever written about this subject is "Rich dad, Poor dad" by Robert Kyosaki.

Dont buy a "small house" in your college town, buy a big house in your college town and rent out the rooms - you can pack 5 or 6 college kids in it and charge them each a respectable rent. Do yourself a favor, live in it - they will destroy it if you dont.

One last thing - dont listen to people who answer questions without knowing the answer.

Regards