Should I try to buy a house now in a different state to use as a rental?

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Husband and I currently live in florida, will be moving to Oklahoma soon for 7 months, then to who knows where (we’re a military family). ALL my family is in Indiana. My father runs a construction business (framers) and the family is used to working together, like my two brothers work for my dad and will eventually take over if that’s what they want to do, but of course construction isn’t what it used to be. In the mean time my parents are buying up really cheap properties and turning them into rentals so they’ll have decent income when my dad stops building houses. Prices in Indiana are always pretty good and with this economy, even better. I was considering looking around for just one simple, and cheap property, maybe 50,000 and having my dad be in charge like a leasing agent would for inspections after people move out and such, and of course he’d get paid for it. I really don’t think we’d have a problem family wise, but I’m unsure if I should take a leap. At that price range, with a decent mortgage rate, what would my approximate payment a month be you think? I’ve done some mortgage calculators, but I’m unsure about taxes and insurance. Is 500 a month realistic? Is it way more complicated to buy a house when your out of state residents? I want to step into a bank/go on base to find out about VA loans, but wanted to find out a little before heading in. Thanks for any info, advice.

I have been offered a 60K job in Sierra Vista, AZ. And my wife and I are having trouble figuring out how much home we can afford! Most online calculators are showing us from 120s all the way to 220s!!! We would like to stay within the in the 26%/33% or close to the rule of thumb when it comes to debt. We will be able to use a VA home loan, since I am prior military. We have approx. 10K to put down and have approx. $ 800.00 in school debt, cars payments, CC payments, etc. Any help on getting us a solid number would really be appreciated. Thanks in advance!

Jason
With a VA loan you don’t have to pay PMI correct? But a VA loan is not the way to go? That’s interesting. Also we are thinking a 30 yr loan which is between 6.3 and 6.5 I believe. Does this help narrow it down at all?

7 Comments
  1. Reply
    chatsplas
    January 25, 2011 at 3:37 am

    Long distance landlording can be fraught with problems.
    But if your father is doing this for himself, doing one more for you, with fee, should be OK.
    Taxes vary depending on community, county, school district, etc. Look at some properties listed for sale.
    Non owner occupied properties are more difficult to get financed and require a Bigger down payment, and insurance costs more.

  2. Reply
    Mr. Fix-It
    January 25, 2011 at 4:16 am

    Mortgage rates are dirt cheap right now and buyers still own the market…. Having family members that understand construction and renting certainly helps…As long as the rent covers the expenses–you are gaining equity in the long term….Talk to your Dad more—-I think he will support your decision to dive into your first investment—and probably offer up some very practical advice and help…. Your situation is nice—-Go for it ! Every investor starts with one property… GOOD LUCK !

  3. Reply
    golferwhoworks
    January 25, 2011 at 5:00 am

    first of all you must put down 30% on investment property. Then try to get a mortgage for $ 35,000. No one wants to take the time to do this loan. Sorry. Just the way it is as no professional will go into this knowing he or she will in fact loose on this loan. Time is money for all of us and it takes just as long to do your loan as a $ 100,000 loan. By the time the underwriting and processing are done there may be $ 10 for a loan officer. Would you work 2-4 weeks for $ 10. I think not. Most banks don’t want it either. The same reason applies to them as they make the vast majority of their money in the interest earned on your loan.
    Good luck with this venture

  4. Reply
    mandysullivan2002
    January 25, 2011 at 5:30 am

    VA loans are about the worst loans on the market. You are better off going conventional if at all possible (You can do this if you have 10% down-you will have to pay PMI (private mortgage insurance) but its MUCH cheaper than the VA loan. FHA loans are also expensive-they tack insurance onto the loan and you end up paying interest on the insurance.

    The house payment is going to differ depending on whether you go with a fixed or adjustable and how much you borrow etc. I think you should go to a mortgage company and ask them for Good Faith Estimates. the important thing is to not buy more than you can afford. remember the more you buy and the more you borrow the more money the real estate agent and loan officer are making.
    Good luck.

  5. Reply
    Heather Y
    January 25, 2011 at 6:00 am

    So much of that is going to depend on your interest rates, property taxes, private mortgage insurance, and homeowners insurance. If you don’t put down at least 20% you will have to carry private mortgage insurance (which is a load of crap because the only one it covers is the bank). 60K/year works out to 5K/month. After taxes you’ll have less than 4K, so you should probably try to cap all the home expenses at about a grand. That probably means you’re going to be a lot closer to 120K than 220K when shopping for a house.

    For example: some friends of ours just put in a 90K offer on a house that’s going to end up costing about $ 780 month with property taxes, PMI, homeowners insurance.

  6. Reply
    Ron B
    January 25, 2011 at 6:04 am

    It is impossible to be exact without more information, But here is an general guess. Your mortgage payment will be around $ 650 for every 100K you borrow. Taxes and insurance push this up to around $ 800. Since you make 5k per month your 33% payment would leave you 1666$ . This is about 200k.
    VA loans are great loans in that they give good interest rates, and often come with down payment assistance. The bad thing about them is that they are much more strict than other loans. You will generally qualify to purchase less than withother lenders.
    If you went through another lender with interest only payments, you would probalbly qualify for 350K . Just ask your mortgage broker and he should be able to give you the ins and outs of each of the loans.

  7. Reply
    celia s
    January 25, 2011 at 6:59 am

    http://www.dotheloan.com/RequiredIncomeCalc

    this website will help you. If you need any help, just email me.

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