Here's the link to my original post: https://www.reddit.com/r/personalfinance/comments/7wlx8s/do_i_buy_acreage_or_a_rental_property_first/?st=ji7i5eyw&sh=753bcbb5
I've gotten a couple of messages asking what I decided and how it turned out, so I thought I'd post an update for anybody who might be interested in doing something similar.
I bought a rental property, got an amazing price on it. 1200 sq ft + 800 sq ft non-contiguous bonus space, huge pool, huge backyard, 7th row back from beach. Nicely updated inside, but the outside hadn't been touched in a few years (owners were older and could not maintain it). I got it for 362.5k, it appraised for 375k, and to be quite honest I could sell it tomorrow for 415k+ (the market has been heating up as I predicted, and homes objectively not as nice as mine have been selling over 400k). I created an LLC and transferred the house into it as well.
The bad news: the mortgage/taxes/insurance is fully half of my take-home monthly pay. (I make 63k before taxes, mortgage is a bit over $1800. I put 75k down on the house). So in a technical sense I guess I am house-poor, though my expenses are very low (I am living with my parents while the house is rented) so I'm not feeling it much and am rebuilding my personal emergency fund quickly.
The good news: after a month of frantic work, I got the house looking AMAZING while managing to spend <4k, and it is fully booked for the rest of the summer and will finish up earning well over 30k (right now has confirmed income at 31.5k, but September is continuing to book up so will go higher). With the start-up costs, I won't be cash-positive on it this year BUT the mortgage will be fully paid from its earnings with a bit put away for the emergency fund. AND in October I'll get to move in and live there until May, rent free and mortgage paid. My renters are loving the property and a few of them have already rebooked for next year. I even have somebody who wants to book for a beach wedding and have the reception in the backyard!
In terms of how much work is required from me now that the house is rented out: it's not too much. I chose to do the lawn maintenance myself to save a bit of money, so every Saturday morning at the turn I go down there and spend an hour or two. The rental agency I am using handles all routine maintenance calls and I pay a cleaner, a pool guy, and for linen service. I have to remember to pay the bills of course and juggling multiple bank accounts with multiple banks is a bit challenging, but not bad. There will be much less start-up work to get it ready to go next spring, but it will probably still be a week or two of hard work.
So overall, I believe this was a very good decision and a huge investment in my future here. I plan to pay down the mortgage aggressively (I have good upwards potential at my job and have already gotten a raise for performance) and continue to buy investment property once it is paid off. Financial independence has always been my long term goal and I think this was a good step in that direction!
I'm happy to answer any questions anybody might have about my experience!
Submitted June 09, 2018 at 11:04AM by trucksareforgirls https://ift.tt/2Jq53t9
