I’m looking into investing in property with a group of friends and I want to get some insight. Is this the right place to ask about managing multiple mortgages for different properties?
Are you asking about holding several property mortgages, or are you talking about having multiple loans on a single property?
Grier said:
Are you asking about holding several property mortgages, or are you talking about having multiple loans on a single property?
Sorry for the confusion, I mean owning multiple properties each with its own mortgage.
@Steele
It’s crucial to ensure that each investment is sound. Always have a financial cushion to cover unexpected vacancies and maintenance costs.
One thing to consider is the initial cost. I sold stocks to buy properties and ended up with a huge tax bill the next year. It’s also wise to compare mortgage brokers to secure the best deal. When it comes to investing, the returns should ideally be higher than what you’d typically expect from the stock market, considering the additional effort and lack of liquidity.
@Afton
Do you base your expected stock returns on the general market performance, like the annual 7% increase of the S&P 500, or on your personal investment returns? It seems prudent to expect at least a 7% return annually from stocks, but I’m curious about your perspective for real estate.
@Steele
For stocks, yes, I consider the historical average of 7%. For real estate, the return should ideally be above 7% after factoring in the extra work, the lack of quick access to your money, and the taxes on selling. Some people are content just breaking even on rentals because they prefer real estate as an investment class over others.
As a lender, my advice is to have a realistic view of what federally guaranteed mortgages can and cannot do. They are not intended for complex cash flow strategies using conventional debt rates. The limit of 10 financed properties is because these loans are meant for smaller investors or homeowners. If you’re planning something more complex, expect to encounter more stringent financing conditions.
I have multiple mortgages and despite some challenges, I’ve managed quite well.
This doesn’t sound like a good idea to begin with.