Want To Buy 5 Rent Houses In Amarillo?

Pamela Madore
The Pamela Madore Group
Keller Williams Realty
806-340-7630
http://iloveamarillo.com

Owning rental property is not for the faint of heart.  It can, however, be a very lucrative business, According to City-Data there are currently 24,847 rentals in Amarillo.  In this market you will have very few vacancies.

So how would you start to buy a rent house?

                        

The first thing that you would need to do is to determine what profit margin or monthly cash flow you want.  You also need to determine if you want the rental property for pure cash flow or if you are also interested in the appreciation of the real estate itself. 

Vacancies and repairs can eat up your cash flow pretty quickly.  It is nice to have great, long-term tenants that pay on time.  That is not always the case, however.  Therefore, you will need reserves.

If you pay cash for the property then you will have no debt service and the reserves aren't as important.   If you have debt service and a tenant moves out leaving repairs needed and it sits vacant for 2 months then you could very well have lost your profit for the year.  

Many people opt for several rental properties.  The theory is that if you have vacancies the cash flow from the other properties will cover the debt service for all of the properties including the vacant one.  

If you have 5 or more properties I would recommend that you get a commercial property insurance policy.  It is more comprehensive and less expensive than getting single policies. 

Remember to put aside money each month for the taxes that all come due in November.

You have now done your homework and decided which direction you want to go.  I will add to that, also, that you will want to determine what price range you want to be in.

 

All of that done, time to find out how you are going to get all of these financed--if you aren't paying cash.  

You can start at your local bank.  Generally on investment property they will want 20% to 30% down payment.  The property must meet all of the guidelines and you will need to qualify.  You can do this with the bank until you reach 5 properties and then you need a new tactic.  Most banks won't go over five properties plus your primary residence.  





 

Some creative ways would be owner financing, investor financing, or private money.  The interest rates will be higher on these types of loans but usually you don't have to put as much as a down payment.

My advice?  Start small.  Buy one property and get used to the feel of it.  Learn how to screen for tenants and fill out a lease.  Collect a few months of rent and see if this is for you.  If so, keep going.

As with all landlords, you will have horror stories!

For information on putting your plan together, call me for an appointment and I will help you with the details!

Pamela Madore
The Pamela Madore Group
Keller Williams Realty
3955 S. Soncy
Amarillo, TX 79119
806-290-1920
http://iloveamarillo.com