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[disneysteve]

What I mean is that people prefer to rent because rent is cheap vs buying your own house because mortgage payment is expensive so employees prefer to rent. An investor will look for a really good deal maybe a foreclosure so that he buys and he can pay the mortgage and rent it to those employees having a profit.

If the investor buys the house and rents it out at a profit, that means the mortgage payment is less than the rent payment. That also means that the renter could have just bought the house (assuming they wanted to and had the means to) and their mortgage payment would actually be lower than the rent payment on the same house.

I'm still not sure what it is you are trying to say here.

[Gailete]

If the investor buys the house and rents it out at a profit, that means the mortgage payment is less than the rent payment. That also means that the renter could have just bought the house (assuming they wanted to and had the means to) and their mortgage payment would actually be lower than the rent payment on the same house.

I'm still not sure what it is you are trying to say here.

@Daniel - I too am confused as to the point you are trying to make, partly because you are making all sorts of assumptions, such as people buying a foreclosed house, or that they would buy if they could get the house mortgage for what they pay in rent. Mortgages for rentals are almost always less than the rent, but that didn't mean that the renter bought it. Many renters live hand to mouth and never save up a penny for a down payment nor do they seem to want the responsibility to taking care of a house. Much easier to be late with the rent and then when the furnace goes out call the landlord 3 times before 8AM complaining and asking when you will be there to fix it (as if they should expect royal treatment when they still owe that month's rent). Those that rent don't have to take responsibility for training themselves and their kids to not kick through the screen door since someone has to pay to fix it, or knock holes in walls, etc.

We have a rental that we got for around $30K. Someone had been living in it the way it was but we wanted more money for it, so we took out another loan to do all the necessary repairs, new roof, windows, etc. Instead of an owner paying $250/month on the mortgage we have a tenant that pays $725/month. He could certainly have bought the place himself. (our actual loan payments at $356/month).

So I'm having a hard time buying your arguments or even understanding them. Do you have rental property? Or is this what you seem to be seeing or assuming for those late night infomercials about how to buy and flip properties on the cheap?

[Danielvalerio506]

Instead of an owner paying $250/month on the mortgage we have a tenant that pays $725/month. He could certainly have bought the place himself. (our actual loan payments at $356/month).

Yes I understand you guys, that is called leverage, the tenant pays rent which is higher than your mortgage payment so you make a profit.

When you buy a property as an investor your goal is to make a profit from it so you look at the best possible deal so that the mortgage can be lower than the rent the tenant will pay, if not you clearly won´t make a profit, so we have that point clear, you as an investor will seek for a property that meets certain criteria so that it can be a good investment property.

When someone let´s say an employee seeks for a home they don´t seek for an investment property they seek for a place to live, in order to fullfil that desire of owning a home they buy their dream home and pay the mortgage which is higher that the mortgage you pay for your rental property.

Clearly they could´ve bought your rental property and pay a lower mortgage but they prefer to buy a home to live in because they are not investing they are looking for a place to live.

That´s why I say that mortgages for homes are higher than rents because when you go to rent that means a landlord owns the property and clearly he is making a profit, either the property if fully paid or it had a very good price so that the landlord can pay the mortgage and still make a profit.

[Jluke]

back to wins...

bought a new car with 0.9% financing for 48 months... 2017 Accord LX. good discount because I think they are making way for the 2018's... it's my commuter car so don't need the latest and greatest. lowest mileage used accord was a 2015 and priced around $3000 less. New was the way to go for me. need that 4 miles to start. Seem to be replacing my commuter cars every 6 years.

Also, credit score showed as 846. So don't believe the rumors of how paying off a mortgage hurts your credit score.

[Gailete]

back to wins...

bought a new car with 0.9% financing for 48 months... 2017 Accord LX. good discount because I think they are making way for the 2018's... it's my commuter car so don't need the latest and greatest. lowest mileage used accord was a 2015 and priced around $3000 less. New was the way to go for me. need that 4 miles to start. Seem to be replacing my commuter cars every 6 years.

Also, credit score showed as 846. So don't believe the rumors of how having a mortgage helps your credit score.

Not sure I understand that mention of your credit score and the mortgage not helping. You can't get a much better score than what you have!

[Jluke]

Not sure I understand that mention of your credit score and the mortgage not helping. You can't get a much better score than what you have!

Usually someone mentions how having a mortgage helps your credit score and that it will really drop when you pay it off.

I got rid of my mortgage a year ago, and it didn't hurt my score.

I was just trying to break that myth that some people believe with relationship between no mortgage and credit score going down.

and i've been up since 3AM so my brain is tired. I'll see if that needs revised in the original post.

[Gailete]

That´s why I say that mortgages for homes are higher than rents because when you go to rent that means a landlord owns the property and clearly he is making a profit, either the property if fully paid or it had a very good price so that the landlord can pay the mortgage and still make a profit.

About two years before we bought our rental property, I had a chance to buy a row house almost identical to the one we bought for the rental and at the same price. I would not have been buying it to rent but to live in since the mortgage payment would have been about 1/3 or less of what I had been paying with a Mr. BigBucks I had been married to. I lost the chance to buy it as my house hadn't sold yet. So I ended up eventually getting something else.

So in that example, my mortgage would have been much less than renting the place. It always depends. Depends on the people involved. Depends on the building involved. Depends on the money involved and the risk the person will take with his money. Our rental should be paid off in less than a year, and if so, if the economy really skins its nose and the only way to have a renter is to reduce the rent significantly, we could do it if needed without taking a loss due to the fact that the mortgage is paid off.

[Danielvalerio506]

About two years before we bought our rental property, I had a chance to buy a row house almost identical to the one we bought for the rental and at the same price. I would not have been buying it to rent but to live in since the mortgage payment would have been about 1/3 or less of what I had been paying with a Mr. BigBucks I had been married to. I lost the chance to buy it as my house hadn't sold yet. So I ended up eventually getting something else.

So in that example, my mortgage would have been much less than renting the place. It always depends. Depends on the people involved. Depends on the building involved. Depends on the money involved and the risk the person will take with his money. Our rental should be paid off in less than a year, and if so, if the economy really skins its nose and the only way to have a renter is to reduce the rent significantly, we could do it if needed without taking a loss due to the fact that the mortgage is paid off.

The best case scenario and the ideal one would be as you stated to pay off the mortgage so that the whole amount that the tenant pays you can be profit. In the case you explain aswell it would be a great option to reduce the rent so that you can keep your tenant in the property and you wouldn´t lose any money because you already paid it off. That´s the main idea in real estate to own the properties ASAP but as you say it depends on a lot of factors.

[Gailete]

Usually someone mentions how having a mortgage helps your credit score and that it will really drop when you pay it off.

I got rid of my mortgage a year ago, and it didn't hurt my score.

I was just trying to break that myth that some people believe with relationship between no mortgage and credit score going down.

and i've been up since 3AM so my brain is tired. I'll see if that needs revised in the original post.

I get it now. Never heard of that though. What gets me is people thinking they can never cancel a credit card, etc. because of what it will do to their credit score. I don't think I have ever done a thing in my life in consideration of my credit score. Except for when buying a house or a car, I never even think about it. When Discover card started showing your score with every bill I then noticed it, especially as a lot of last year's expenses were put on credit cards and I saw the score sinking little by little from about 850. Now that we are working on paying the money back and have paid off two credit cards and the car and are making big payments on the credit cards it is climbing back up. At no time did it get low enough that we would have been disqualified from getting a loan if we wanted one. It will be interesting to see what happens whenever we get our mortgage paid off.

[Gailete]

The best case scenario and the ideal one would be as you stated to pay off the mortgage so that the whole amount that the tenant pays you can be profit. In the case you explain aswell it would be a great option to reduce the rent so that you can keep your tenant in the property and you wouldn´t lose any money because you already paid it off. That´s the main idea in real estate to own the properties ASAP but as you say it depends on a lot of factors.

The only time we would even consider renting the place for less than fair market value and what we normally get is if the economy takes such a nose dive that we end up in a situation like the dust bowl depression era. That we can't find a tenant anywhere that can pay the usual amount. If anything else we have a son who if push came to shove I would rather see him in the house for free than some chump living there basically free.

I don't think that most landlords are trying to get their properties paid off ASAP either. Paying on them provides a tax deduction for the interest to counteract the rental income. There is another thread about rental properties that you might want to visit and see what they have to say as some of your thoughts about rental property seem to be assumptions without data to back them up. There are a lot of folks on this forum that have rental property.

[Danielvalerio506]

The only time we would even consider renting the place for less than fair market value and what we normally get is if the economy takes such a nose dive that we end up in a situation like the dust bowl depression era. That we can't find a tenant anywhere that can pay the usual amount. If anything else we have a son who if push came to shove I would rather see him in the house for free than some chump living there basically free.

I don't think that most landlords are trying to get their properties paid off ASAP either. Paying on them provides a tax deduction for the interest to counteract the rental income. There is another thread about rental properties that you might want to visit and see what they have to say as some of your thoughts about rental property seem to be assumptions without data to back them up. There are a lot of folks on this forum that have rental property.

Yeah I understand your points. Thanks!! What´s the name of the thread??

[katwillny]

Great forum, long time lurker but recently decided to get involved and post and add to the wealth of knowledge this forum offers. Over the course of two months my wife and I have paid $8,380 dollars on our one consumer cc. That card is now paid off, we intend to build up our emergency fund to match the card's credit limit and thus not have the excuse to use it for "emergencies". We started picking up OT at work and I have been selling a lot of gently used clothes and items around the house for which we no longer have use for on LetGo.

[scfr]

Great forum, long time lurker but recently decided to get involved and post and add to the wealth of knowledge this forum offers. Over the course of two months my wife and I have paid $8,380 dollars on our one consumer cc. That card is now paid off, we intend to build up our emergency fund to match the card's credit limit and thus not have the excuse to use it for "emergencies". We started picking up OT at work and I have been selling a lot of gently used clothes and items around the house for which we no longer have use for on LetGo.

Wow - great job!

[disneysteve]

We just sat down to buy DD's textbooks for fall semester. She needs 11 books. We were able to get 10 of them, 4 from Half.com and 6 from Amazon.
Total cost was $65.07!

The 11th book wasn't available at either site. I'll keep checking but she may end up having to get it at the bookstore. According to the store website, it is $16.95 used, $22.60 new. Assuming they have a used copy, she'll do that, but even if she needs to buy it new, that still makes the grand total just $87.67 which will be her cheapest semester yet. I'd call that a win.

[disneysteve]

We just sat down to buy DD's textbooks for fall semester. She needs 11 books. We were able to get 10 of them, 4 from Half.com and 6 from Amazon.
Total cost was $65

I spoke a little too soon. DD pointed out that this wasn't all of her books. There are 3 other classes that haven't posted texts yet. One probably won't have any books as it's media-based. One is an online class that may or may not have a text. The third probably will have a text. Still, the total will be pretty low, under $150 most likely.