Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

Prior to moving to our current location, my wife and I lived in a one bedroom condo. We continue to own the condo, owing about $80k on it. We get enough rental income that we make a profit after condo fees, management fees, and mortgage interest.

Now we own a larger home and we are looking to move. A big part of me is tempted to become a landlord again. However, we owe substantially more on the property (like $370k). We are not under water. We could sell and either break even or make a little money. However, selling seems expensive after you take into account 6% realtor fees, potentially paying for someones closing costs, etc.

So I'm tempted to rent it out, again. I'd be the landlord of two properties. However, where we will be moving I'd like to buy a home eventually. Will owning these two properties with mortgages on them interfere with my ability to get financing for another home? Would I be seen as overextended? Or would the fact that rent is covering these mortgages mean I could still get financing on a third home?

Also am I just over exposing myself and my family to excess risk? A little condo is one thing, a home where we owe twice as much as our yearly income is another.

share|improve this question
add comment

1 Answer 1

Even after the real estate crash, there are banks that lend money outside of the rules I'll share.

A fully qualified mortgage is typically run at debt to income ratios of 28/36, where 28% of your gross monthly income can apply to the mortgage, property tax, and insurance, and the 36% is the total monthly debt (including the mortgage, etc) plus car loan student loan, etc. It's less about the total loan on the potential than about these ratios. The bank may allow for 75% of monthly rent so until rentals are running at a profit, they may seem a loss, even while just breaking even. This is just an overview, each bank may vary a bit.

share|improve this answer
add comment

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.