Dave's thing is to never borrow money, because it's dumb to go into debt.
He doesn't count primary residences as debt. But he only likes 15 year mortgages max, where at least 20% is put down and the payments are less than 25% of your take home pay.
Jetskiier, borrowing a quarter million dollars for a 25 year loan on a house for students to party in... Dave would have a heart attack if you asked him what he would do if he were you :cool2: Before you jump into anything, take a hard look at all the numbers. It might make sense, I have no idea what your situation is, but don't forget you have to pay property taxes (I'm guessing they'd be around $5-6 grand a year), you can't take a tax deduction on the interest if it's not your primary residence, and you have to pay income taxes on any profit you do make each year. Just some things to consider.
I'm not sure why a 24 year old would want the headache... start saving your extra money in good mutual funds or buy a house for yourself to live in if you don't already have one. Much much less risk and less stress IMO.
Maybe I'm wrong, I know its going into debt by buying a rental house, but it wouldn't cost me any of my income (if all goes as planned), the rental income would more than cover the mortgage and taxes. I wouldn't pay income tax on the income, because it would stay in the company, with me making very little (probably 0 in the beginning, but more after 10-15 years). I could write off the depreciation of the house if I had to, but that would come back to bite me in 25 years when I sold the house, as I would have to pay tax on the difference of the depreciated value and whatever I sold it for.
I don't buy a house for myself mainly because I dont have to, I'm living with a friend and the rent is less than the interest I would be paying on a mortgage, plus the mortgage would be coming out of my pocket, unlike the rental house. I know there will be some problems, nothing is ever easy or everyone would be doing it (there are a lot of people that own rentals in the area).
I am not completely sold on the idea, thats why I asked for opinions, but it does seem like a good idea to me. At the moment I'm reading "How to invest in real estate for dummies" its a pretty good book, I've read a couple more and like I said before I have some decisions to make and more learning to do.
I knew a guy that had a 6 bedroom rental house, which was mortgaged, and it paid for its own mortgage, the mortgage on his house (small house in the country), and his boat payment. I'm not saying thats what I'm trying to do, I would invest the money back in the house, but I do think there is money to be made. The average rental rate is around $400/room, plus utilities.
