Mixing
Taking a loan for flat just to rent. Is this a bad idea?
Clash Royale CLAN TAG#URR8PPP
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty margin-bottom:0;
up vote
4
down vote
favorite
This is just a very simple summary of this idea to paint a picture for question:
I have been thinking about taking a loan to buy a flat that would serve only for renting out. My reasoning here is that basically The loan will over the time be payed by the person renting the flat while after some time (around 30 years) i'll just be left with a free flat.
Obviously this sounds too good to actually work as easily as described and if it did then everyone would do it. What i'm looking for here are the reasons why this idea is unrealistic in real life.
loans real-estate
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
4
down vote
favorite
This is just a very simple summary of this idea to paint a picture for question:
I have been thinking about taking a loan to buy a flat that would serve only for renting out. My reasoning here is that basically The loan will over the time be payed by the person renting the flat while after some time (around 30 years) i'll just be left with a free flat.
Obviously this sounds too good to actually work as easily as described and if it did then everyone would do it. What i'm looking for here are the reasons why this idea is unrealistic in real life.
loans real-estate
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago
add a comment |Â
up vote
4
down vote
favorite
up vote
4
down vote
favorite
This is just a very simple summary of this idea to paint a picture for question:
I have been thinking about taking a loan to buy a flat that would serve only for renting out. My reasoning here is that basically The loan will over the time be payed by the person renting the flat while after some time (around 30 years) i'll just be left with a free flat.
Obviously this sounds too good to actually work as easily as described and if it did then everyone would do it. What i'm looking for here are the reasons why this idea is unrealistic in real life.
loans real-estate
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
This is just a very simple summary of this idea to paint a picture for question:
I have been thinking about taking a loan to buy a flat that would serve only for renting out. My reasoning here is that basically The loan will over the time be payed by the person renting the flat while after some time (around 30 years) i'll just be left with a free flat.
Obviously this sounds too good to actually work as easily as described and if it did then everyone would do it. What i'm looking for here are the reasons why this idea is unrealistic in real life.
loans real-estate
loans real-estate
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 5 hours ago
asked 6 hours ago
RotV
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 6 hours ago
RotV
213
asked 6 hours ago
RotV
213
213
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
RotV is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago
add a comment |Â
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago
add a comment |Â
2 Answers
2
active
oldest
votes
up vote
3
down vote
It is certainly possible and people have done it before.
However, I can think of a few risks/problems:
- Market fluctuations: It might just happen that you buy when the market is up, and over time it goes down (both the price for buying and for renting). So you cannot cover your mortgage any more with the rent and have to chip in yourself, effectively overpaying for a property that is not worth much any more. If you are unable to cover the difference between mortgage and rent yourself, then the property might even get foreclosed and you are left with a loss.
- People tend to underestimate renting- and property-related costs/risks. This can leave you with a non-viable operation (having to pay much more than you earn or can afford), be it because it is unsustainable in general or because the owner gets into liquidity issues because of the unplanned costs.
- Vacancies
- Repairs
- Tax payments
- Non-payment/eviction of tenants
- Legal issues and administration costs
- You have to come up with a reasonable down-payment (depending on your own income situation, credit situation, etc.) yourself.
- Building standards and styles change over time: The "free" flat you get after several decades might not be so desirable any more because the way it is built is sub-standard or out of fashion at that point.
- Overpaying: The people who were actually successful doing what you describe had experience and a sense for the market and the opportunities it represents. Not everyone has that.
Doable? Certainly. But it's not free money. You will have to put in effort to learn (outsourcing everything is expensive), to manage things yourself and to solve critical problems in a creative way. The changes of success also highly depend on the state and development of the market we are talking about, about taxes and regulations in your country, about your personal skills and the effort you are ready to invest.
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
0
down vote
Actuall a LOT of people can do it and depending when you do it people made millions with it. Problem obviously is that you will not rent it out for 30 years most likely, so you need interim repairs, upgrades, downtime searching for renters.
But yes, this is how many people make money and make their retirement. Once you hit 5+ appartments thigns get more smoothly.
answered 4 hours ago
TomTom
1,6471013
add a comment |Â
2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
3
down vote
It is certainly possible and people have done it before.
However, I can think of a few risks/problems:
- Market fluctuations: It might just happen that you buy when the market is up, and over time it goes down (both the price for buying and for renting). So you cannot cover your mortgage any more with the rent and have to chip in yourself, effectively overpaying for a property that is not worth much any more. If you are unable to cover the difference between mortgage and rent yourself, then the property might even get foreclosed and you are left with a loss.
- People tend to underestimate renting- and property-related costs/risks. This can leave you with a non-viable operation (having to pay much more than you earn or can afford), be it because it is unsustainable in general or because the owner gets into liquidity issues because of the unplanned costs.
- Vacancies
- Repairs
- Tax payments
- Non-payment/eviction of tenants
- Legal issues and administration costs
- You have to come up with a reasonable down-payment (depending on your own income situation, credit situation, etc.) yourself.
- Building standards and styles change over time: The "free" flat you get after several decades might not be so desirable any more because the way it is built is sub-standard or out of fashion at that point.
- Overpaying: The people who were actually successful doing what you describe had experience and a sense for the market and the opportunities it represents. Not everyone has that.
Doable? Certainly. But it's not free money. You will have to put in effort to learn (outsourcing everything is expensive), to manage things yourself and to solve critical problems in a creative way. The changes of success also highly depend on the state and development of the market we are talking about, about taxes and regulations in your country, about your personal skills and the effort you are ready to invest.
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
3
down vote
It is certainly possible and people have done it before.
However, I can think of a few risks/problems:
- Market fluctuations: It might just happen that you buy when the market is up, and over time it goes down (both the price for buying and for renting). So you cannot cover your mortgage any more with the rent and have to chip in yourself, effectively overpaying for a property that is not worth much any more. If you are unable to cover the difference between mortgage and rent yourself, then the property might even get foreclosed and you are left with a loss.
- People tend to underestimate renting- and property-related costs/risks. This can leave you with a non-viable operation (having to pay much more than you earn or can afford), be it because it is unsustainable in general or because the owner gets into liquidity issues because of the unplanned costs.
- Vacancies
- Repairs
- Tax payments
- Non-payment/eviction of tenants
- Legal issues and administration costs
- You have to come up with a reasonable down-payment (depending on your own income situation, credit situation, etc.) yourself.
- Building standards and styles change over time: The "free" flat you get after several decades might not be so desirable any more because the way it is built is sub-standard or out of fashion at that point.
- Overpaying: The people who were actually successful doing what you describe had experience and a sense for the market and the opportunities it represents. Not everyone has that.
Doable? Certainly. But it's not free money. You will have to put in effort to learn (outsourcing everything is expensive), to manage things yourself and to solve critical problems in a creative way. The changes of success also highly depend on the state and development of the market we are talking about, about taxes and regulations in your country, about your personal skills and the effort you are ready to invest.
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
up vote
3
down vote
up vote
3
down vote
It is certainly possible and people have done it before.
However, I can think of a few risks/problems:
- Market fluctuations: It might just happen that you buy when the market is up, and over time it goes down (both the price for buying and for renting). So you cannot cover your mortgage any more with the rent and have to chip in yourself, effectively overpaying for a property that is not worth much any more. If you are unable to cover the difference between mortgage and rent yourself, then the property might even get foreclosed and you are left with a loss.
- People tend to underestimate renting- and property-related costs/risks. This can leave you with a non-viable operation (having to pay much more than you earn or can afford), be it because it is unsustainable in general or because the owner gets into liquidity issues because of the unplanned costs.
- Vacancies
- Repairs
- Tax payments
- Non-payment/eviction of tenants
- Legal issues and administration costs
- You have to come up with a reasonable down-payment (depending on your own income situation, credit situation, etc.) yourself.
- Building standards and styles change over time: The "free" flat you get after several decades might not be so desirable any more because the way it is built is sub-standard or out of fashion at that point.
- Overpaying: The people who were actually successful doing what you describe had experience and a sense for the market and the opportunities it represents. Not everyone has that.
Doable? Certainly. But it's not free money. You will have to put in effort to learn (outsourcing everything is expensive), to manage things yourself and to solve critical problems in a creative way. The changes of success also highly depend on the state and development of the market we are talking about, about taxes and regulations in your country, about your personal skills and the effort you are ready to invest.
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
It is certainly possible and people have done it before.
However, I can think of a few risks/problems:
- Market fluctuations: It might just happen that you buy when the market is up, and over time it goes down (both the price for buying and for renting). So you cannot cover your mortgage any more with the rent and have to chip in yourself, effectively overpaying for a property that is not worth much any more. If you are unable to cover the difference between mortgage and rent yourself, then the property might even get foreclosed and you are left with a loss.
- People tend to underestimate renting- and property-related costs/risks. This can leave you with a non-viable operation (having to pay much more than you earn or can afford), be it because it is unsustainable in general or because the owner gets into liquidity issues because of the unplanned costs.
- Vacancies
- Repairs
- Tax payments
- Non-payment/eviction of tenants
- Legal issues and administration costs
- You have to come up with a reasonable down-payment (depending on your own income situation, credit situation, etc.) yourself.
- Building standards and styles change over time: The "free" flat you get after several decades might not be so desirable any more because the way it is built is sub-standard or out of fashion at that point.
- Overpaying: The people who were actually successful doing what you describe had experience and a sense for the market and the opportunities it represents. Not everyone has that.
Doable? Certainly. But it's not free money. You will have to put in effort to learn (outsourcing everything is expensive), to manage things yourself and to solve critical problems in a creative way. The changes of success also highly depend on the state and development of the market we are talking about, about taxes and regulations in your country, about your personal skills and the effort you are ready to invest.
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 2 hours ago
answered 2 hours ago
Weirdo
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
answered 2 hours ago
Weirdo
33116
answered 2 hours ago
Weirdo
33116
33116
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Weirdo is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |Â
add a comment |Â
up vote
0
down vote
Actuall a LOT of people can do it and depending when you do it people made millions with it. Problem obviously is that you will not rent it out for 30 years most likely, so you need interim repairs, upgrades, downtime searching for renters.
But yes, this is how many people make money and make their retirement. Once you hit 5+ appartments thigns get more smoothly.
answered 4 hours ago
TomTom
1,6471013
add a comment |Â
up vote
0
down vote
Actuall a LOT of people can do it and depending when you do it people made millions with it. Problem obviously is that you will not rent it out for 30 years most likely, so you need interim repairs, upgrades, downtime searching for renters.
But yes, this is how many people make money and make their retirement. Once you hit 5+ appartments thigns get more smoothly.
answered 4 hours ago
TomTom
1,6471013
add a comment |Â
up vote
0
down vote
up vote
0
down vote
Actuall a LOT of people can do it and depending when you do it people made millions with it. Problem obviously is that you will not rent it out for 30 years most likely, so you need interim repairs, upgrades, downtime searching for renters.
But yes, this is how many people make money and make their retirement. Once you hit 5+ appartments thigns get more smoothly.
answered 4 hours ago
TomTom
1,6471013
Actuall a LOT of people can do it and depending when you do it people made millions with it. Problem obviously is that you will not rent it out for 30 years most likely, so you need interim repairs, upgrades, downtime searching for renters.
But yes, this is how many people make money and make their retirement. Once you hit 5+ appartments thigns get more smoothly.
answered 4 hours ago
TomTom
1,6471013
answered 4 hours ago
TomTom
1,6471013
answered 4 hours ago
TomTom
1,6471013
answered 4 hours ago
TomTom
1,6471013
1,6471013
add a comment |Â
add a comment |Â
RotV is a new contributor. Be nice, and check out our Code of Conduct.
RotV is a new contributor. Be nice, and check out our Code of Conduct.
RotV is a new contributor. Be nice, and check out our Code of Conduct.
RotV is a new contributor. Be nice, and check out our Code of Conduct.
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f101399%2ftaking-a-loan-for-flat-just-to-rent-is-this-a-bad-idea%23new-answer', 'question_page');
);
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
The way this is asked is too broad. This depends on the interest rates, tax breaks as applicable, projected rental income, potential appreciation, property taxes, property management, etc of the property, some of these vary widely. This needs to be done for a specific property to arrive at the decission.
– Dheer
4 hours ago