Please Walk Me Through Buying And Renting Out A House?

Rosalia Hibler: In a nutshell, the process would be: 1) Go to the bank and get pre-approved for a mortgage. 2) Go to a real estate agent and have them show you around until you find a house you like 3) Make an offer on the house - negotiate until you reach agreement (if you don't reach agreement, move on); 4) Close on house (actually sit down and sign all the papers); 5) Rent it out (get an agent or do it yourself through ads, etc).Now the tough part. No one is going to give you a mortgage unless you have a full-time job, have had that job for at least two years, will continue to have that job (full-time), and you have good credit. Next, you will need at least 3.5% of the cost of the house in cash for the down payment. Next, there are closing costs - you can negotiate with the seller to pay some or all of these costs (figure on some), but anything the seller does not cover, you will need to pay for in cash. Finally, the lender is going to want to see at least two mo! nth's of payments in your bank account. All told, you will need a minimum of 5 to 10%. Now the kicker - since you are renting out the house, it becomes investment property which will require a larger down payment - somewhere in the range of 15 to 30%. If you lie, tell the lender that the house is going to be your primary residence and the bank finds out it is a rental, the bank's remedies are - go back and REQUIRE you to come up with the extra down payment immediately or even worse, call the loan which means the entire balance is due immediately.Now assuming that you can get the loan, assuming you can fork over the down payment, closing costs, etc., and assuming you can find a house and settle, there is the problem of renting it out. First, in your scenario, you need to assure that the rental payments cover your mortgage - this is easier said then done. Start by checking the surrounding area for comparable rents - if your mortgage is $1,000 a month and comparable rents! are $800 a month, you are either going to have to price your ! rent at $800 or expect to have the house sit vacant, collecting no rent until all the surrounding houses fill up (why should someone pay an extra $200/month if they can get a similar house). Also, if you choose to use a rental agent, you have to pay them - added cost which will up the rent. next, this does not include ongoing maintenance - if you have the time and skills, you can minimize these costs by doing all the work yourself. If not,you will have to hire someone, and you can expect prices to start at $100 a visit and go up from there.And just remember you are liable for all that goes on in the house....Show more