Originally Posted by stephenson
I need to travel back and forth to Pensacola, FL to visit relatives a few times a year ... have noticed is a pretty good rental market in the $1000-1200 a month range ... I have an inexpensive house in Alabama that has been rented for 20 years with pretty good luck and was considering buying another in Pensacola.
Price around $120K and net rent probably in the $800-900 a month range - assuming management fees and some unknown-unknown maintenance issues. I can get a 3.25/30 on current home with an assumable VA loan, increasing my payment, but at least I know I can deduct the larger amount - I probably wouldn't be able to with a loan on the rental unit due to income restrictions.
Am I thinking right?
So if your question is should you buy another rental property, my opinion is great idea. I would make sure I had an agent to manage it for me, and of course you have to run numbers - which you know already having one investment.
Then if your question is where to get $120K. If you use your current home, you can get a lower rate than borrowing on the new property. That has to be good in any book. However, there are limits to what you can deduct on your primary residence, I believe something like $100K over your initial loan to purchase the property. So you need to be sure of the limits. Also, can you cover the total monthly payment of a new loan out of earnings if there are problems with renting? You will be putting your home at risk if you use equity in it to buy the investment. Just wanted to point that out.
Good hunting, I think single family rentals as a whole are underpriced. They can provide income stream and you keep the principal while it grows.