Can a college student buy house, rent it, make payments off rent, and sell it?

Credit and mortgage advice Forums Buying Your Home Can a college student buy house, rent it, make payments off rent, and sell it?

This topic contains 7 replies, has 7 voices, and was last updated by  Anonymous 7 years, 10 months ago.



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  • #208375

    Anonymous

    I’m a college student going into my fourth year, and was wondering if it’s realistic to buy a cheap house anywhere from 100k-500k, rent it, and pay off the mortgage (tax, interest, etc.) with the rent. In case I cant find a tenant immediately, I do have about 7k to help pay for anything.

    I figure since the economy is bad and housing is cheap, I could take advantage of this situation. What are your thoughts?



  • #263500

    Anonymous

    You need to determine if mortgage, taxes, and maintenance will allow you to have a positive cash flow on the property.
    You also need to determine how you would qualify for credit to obtain a loan since it sounds like you are not fully employed yet.
    I believe that the FHA loans with 3.5% down payment require the property be owner occupied.

  • #265039

    Anonymous

    Lets begin at the beginning….how did you pay for college? do you have student loans yet to pay off? If so then forget about owning a house until you have a career and have worked in your job at least 5 years or more. To buy any home you need 20% down plus extra, and need good credit and work experience. I think you’re thinking that now is a good time to buy, but the economy has not tanked yet, and it’s still to get worse, so with that in mind you might not get a job quickly.

    I was a real estate agent plus I’d had my own fixer-upper home and MY rule of thumb is that if you earn $50,000 a year then you’d feel comfortable buying a home at $50,000. If you earn $100,000 then you’d feel comfortable buying a home at $100,000. I suspect any job you start out in would begin at $35,000 for starters. So seems figures don’t equal each other.

    To be able to rent a house it needs to be considered “commercial” property by the zoning department of your county. To be able to buy a home (get it thru the process) you need to make sure insurance companies are writing policies, some aren’t or some aren’t in specific areas or in certain times of the year. And to protect your home you’d probably need flood insurance too along with the PITI payment. You can’t keep a home for a short period of time and make out because your first “several” years you’d be paying mostly the interest. Because it’s a home there may be a problem with ordinances which sometimes say you can’t have more than 2 related families living in a home so be sure and check that county ordinance to remain legal. And, it depends on where that home is because if it’s in a community of homes there may be an ordinance regarding parking (where to park and noise). I heard recently that in some places of the country that if the driveway is not paved then people get fined so you need to check things out carefully. Perhaps if the people you have rent your place also are willing under contract to work for you and refurbish the home too then you will make out well. Charge them a small amount of rent and then turn around and pay them for their work, then resell the home. This is called flipping. But you can only sell the home for the work you put in it and expenses like wiring materials (to bring up to code), paint and such, plus salaries plus a tad more. Remember that you can’t sell the home for more than the neighborhood is worth so choose carefully. I can’t remember if since it would be an intent to flip if you can get a commercial loan or a regular mortgage, so ask.

  • #265108

    Anonymous

    Lets begin at the beginning….how did you pay for college? do you have student loans yet to pay off? If so then forget about owning a house until you have a career and have worked in your job at least 5 years or more. To buy any home you need 20% down plus extra, and need good credit and work experience. I think you’re thinking that now is a good time to buy, but the economy has not tanked yet, and it’s still to get worse, so with that in mind you might not get a job quickly.

    I was a real estate agent plus I’d had my own fixer-upper home and MY rule of thumb is that if you earn $50,000 a year then you’d feel comfortable buying a home at $50,000. If you earn $100,000 then you’d feel comfortable buying a home at $100,000. I suspect any job you start out in would begin at $35,000 for starters. So seems figures don’t equal each other.

    To be able to rent a house it needs to be considered “commercial” property by the zoning department of your county. To be able to buy a home (get it thru the process) you need to make sure insurance companies are writing policies, some aren’t or some aren’t in specific areas or in certain times of the year. And to protect your home you’d probably need flood insurance too along with the PITI payment. You can’t keep a home for a short period of time and make out because your first “several” years you’d be paying mostly the interest. Because it’s a home there may be a problem with ordinances which sometimes say you can’t have more than 2 related families living in a home so be sure and check that county ordinance to remain legal. And, it depends on where that home is because if it’s in a community of homes there may be an ordinance regarding parking (where to park and noise). I heard recently that in some places of the country that if the driveway is not paved then people get fined so you need to check things out carefully. Perhaps if the people you have rent your place also are willing under contract to work for you and refurbish the home too then you will make out well. Charge them a small amount of rent and then turn around and pay them for their work, then resell the home. This is called flipping. But you can only sell the home for the work you put in it and expenses like wiring materials (to bring up to code), paint and such, plus salaries plus a tad more. Remember that you can’t sell the home for more than the neighborhood is worth so choose carefully. I can’t remember if since it would be an intent to flip if you can get a commercial loan or a regular mortgage, so ask.

  • #265781

    Anonymous

    Your first answer is correct. 20-30% down payment is required for a investment property. If you plan this i will bet you a hundred to one that you will lose on this deal

  • #269128

    Anonymous

    I hope you’re leaning toward the 100k range, because a 500k house (depending on where you live) probably won’t rent well seeing as that you’d have to charge enough rent to cover the mortgage…and anyone who could afford that for any length of time would probably just buy their own 500k house. Having said that, yes, it is realistic for you to buy a cheap house and rent it out. Assuming you can get a loan, of course…and yo use the entire 7k as a down payment. Bear in mind that as a landlord, you are responsible for all repairs to the house. If a pipe breaks in the dead of winter, you’re the one who has to shell out for the plumber. When old tenants move out, you have to paint the whole place or pay to have it painted, clean the carpet, etc and renters don’t always take the best care of the places they live in. You could end up with a rathole on your hands. Also, if you get some tenants that decide to not pay rent for a few months, it is a process to have them evicted, and the whole time you are covering mortgage payments out of your own pocket. My dad just evicted a family that was living in a house he owns. They hadn’t paid rent for five months…In fact the entire time they lived in the house (3years or so) never once were they current on their rent payments. They ended up moving to an apartment that cost more even more in rent! Oh, and say some people want to rent your house that you really don’t want to rent to. You can just tell they will be a problem…..if they feel that you are descriminiating against them for any reason, they can take steps and MAKE you rent to them! These are all things that you should know before you rent out property…..now, would you like to hear about all the hidden costs there are in actually buying the house in the first place?

  • #282891

    Anonymous

    Probably not. You most likely have not established a long enough history of credit. Also, the bank wants you to be making a yearly salary so that mortgage is around a third of your expenses. Last but not least the bank only takes into account 25% of the rent money when they consider granting you the loan.

    (Also need a bigger downpayment)

  • #283528

    Anonymous

    Yes this is possible-many students have done this but they usually live there themselves with friends. Bear in mind that 7K isn’t a lot if your tenants default and you’re left to pay the mortgage alone. Factor in gas/electrical safety certificates, possible licensing, not to mention insurance and the cost of repairs should the tenants trash the place and all this may seem much riskier if you don’t have an income of your own. And of course finding a mortgage without a job may well prove to be your greatest challenge!

    If you’re towards the end of your course it may be worth waiting a little longer until you start earning. It doesn’t look as if house prices will shoot up in the next year or so.

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