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October 17, 2008


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I made my foray by purchasing a new primary home and renting the existing one instead of selling it. The timing can be tricky, but in observation this is the most common approach I've seen.

I have to take issue with the following statement: "With the depressed housing market this was an optimal time to rent the house."

It really depends. Rental inventory is a little high right now because some sellers have resorted to renting their home when they couldn't sell it. This gives potential renters more options and drives down the price of rent through competition. It might be balanced out by people who are forced to rent after foreclosure, but that isn't the ideal tenant scenario by any stretch.

Real estate can be an excellent investment right now. Of course the market is down, but isn't that when you should buy? A lot of places are reaching the point where they are becoming undervalued. Some homes can be purchased for less than it would take to build, due to foreclosure or other circumstances.

Like any other investment, real estate is not a sure thing. Being a landlord has its own set of problems.

I started by buying a duplex in my early 20's and living in half of it.


I agree. Optimal may not have been the best word choice there. Optimal is hard to find.

However, becoming a landlord is a bet that you can earn more renting your home and selling later than you would by selling now and putting sale proceeds to work elsewhere.

With the depressed housing market, and large inventory of houses for sale, it was certainly a better time to rent than to sell.

I also thought about doing this, but in the final analysis, we determined the equity in our old house is better used as a down payment on the new one. Plus, my wife isn't too fond of becoming a landlord.

Kevin, You do NOT want to be a landloard as a real estate investor. Two word for you: Property Manager.

Prosperity Junk, from your text: "Finally by renting what was initially a primary residence, I took advantage of a lower fixed interest rate than would typically be available when purchasing an investment property directly." Question: How do you protect your assets against a lawsuit from your tenant if you have the rental property in your name and not through a LLC?

Mark -

You can still transfer the deed of a property that was purchased in your name to a an LLC to protect your assets. You should check with your lender however because some disapprove of that.

As far aquiring a new investment property, buying property under an LLC will be more difficult because you have to get financing as the business. The requirements will be higher and many lenders won't lend to a newly formed LLC without a credit history.

How can someone with no money and crummy credit get into real estate investing?


Thanks for the hint, I was not aware of that. I thought that if I were to transfer the deed from my name to an LLC I would need to refinance the property with a higher interest rate. I knew about lenders' disapproval of that, but I did not know there were exceptions. Thanks again.

Trying to save fees by cutting out a realtor can be costly. My realtor husband is a champion negotiator and has garnered thousands of $ more for people than they would have gotten for themselves. I can't say the same for just any realtor, but it can seriously pay you more than it cost you if you use one that is known for thier skill. And that can includes pricing a property correcty. Not doing so can be costly in the long run as well. Realtor representation on a new build job is essential as well. I see tons of $ left on the table all the time by those who attempt to save $ by going around the realtor. Makes no sense because a good realtor knows where the builder can give. The builder has already built in realtor cost, and if buyer bypasses realtor, builder pockets the money typically and does NOT pass the savings on to the buyer. Not to mention the cost of letting the seller represent you. How can they get you the best deal and get the best deal for themselves at the same time?

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