Investing in Real Estate

Class Notes:

• target retirement fund 2060:diversified portfolio within a single fund that adjusts its underlying asset mix over time

• cash flow positive real estate: two homes under one roof
• same amount of maintenance, but two sources of revenue derived from two tenants 
• finds duplex for $170,000, bank will loan 80% of the home but most provide downpayment of 20%
• 20% 170,00 = $34,000
• must pay $650 a month for 25 years
• charge renters $600 per month each, use extra money to pay a property manager
• property manager: deals with the problems that occur in the house
• Rental yield= yearly income from rent/price of property (should be 10%)

Connection with Family:

     Today we learned how financially viable buying & leasing homes are.  The important thing to do is make the renters pay more than you have to pay for the loan.  I thought this would we a awesome idea for my parents to do, and I was pleasantly surprised to find out that in fact parents were doing it!  My parents own a home in Vienna, Virginia and are renting it out. However, due to the financial crisis my parents are unable to charge the renters more than they have owe the bank.  Thus the renters are not paying for the house completely, but they are lowering the prices substantially.  I then recommended that my parents raise the price slightly so that we are paying even less, or hopefully none of our own money to the bank.  

Project:

http://charlottesville.backpage.com/HomesForSale/
According to this website Charlottesville, where my college is located, is a quite good place to invest.  This is where I am trying to buy a duplex, possibly a quadplex.  Since Charlottesville is a big college town I am looking for a cheaper place because college students will not have large incomes to spend on fancy houses.  Joshua Dawe and I are planning on hypothetically investing in a large, off campus, house that will be able to house several people.  Thus we will have several renters and several sources of revenue.  Rather than just one family, like my family is doing.