Property's cheap, people need rentals - how can I make money?
July 23, 2012 9:13 AM Subscribe
Is it possible to purchase a home with an FHA loan, rehabilitate it, and then rent it out? Also - what's it like to make an independent entry into the rental home market?
posted by speedgraphic to Work & Money (14 answers total) 2 users marked this as a favorite
I recently found out that there are a number of homes in my area that are eligible for some very competitive FHA loans - so competitive in fact, that I could probably afford a mortgage on one or two of these homes in addition to the rent payment on my principal residence.
Is it possible, or wise, to use an FHA loan to purchase a property and then use it as a rental property? I've Googled around a bit and seen time periods between 90 days and 1 year in which the home must be occupied by the loan holder, but most of what I've found is out of date or doesn't seem credible. The FHA website seems reticent to talk about this possibility. I'm not interested in "flipping" the homes.
This would be in a working class neighborhood in Denver, Colorado. Judging by what I pay for my house and what a mortgage payment + rehab costs would be, it seems like I could make between $400-800/mo on these homes. Has anyone else made an independent foray into the rental property business - and what have your experiences been?
In a more general sense, I'm interested in this because it seems like a *relatively* easy way to make money if you've got a bit of capital behind you. When I say easy, I don't mean I'm not devoting my life to it - just that profitability is more than just a pipe dream. My girlfriend wants to start her own coffee shop (and I know she'd be good at it, she's worked every position and has managed a shop for years with extreme business acumen) but it seems like an awful lot of work for extremely uncertain returns, whereas the rental business is still hard work, but the uncertainties seem to be much more limited ("known unknowns") and the break-even point looks to come much sooner in real estate.