Real Estate Investment

HeavyB3 · February 10th, 2009, 07:12 PM

So, while I may be a teacher I plan on being rich one day. I was thinking about possibly investing in another house, one that is being sold on the cheap. Anyone in the mortgage business? I didn't need much of a down payment on my first house, but i've heard its 20% to invest. My credit pretty much perfect, but my income isn't incredibly high.

Ryanwb · February 10th, 2009, 07:56 PM

I looked into it before the market fell. I am pretty lucky I didn't jump in but I think the market is ripe for the picking right now. I tried to buy a foreclosure but I was told I could have to wait for up to a year for the negotiations to work themselves through.

It was a home that I could have gotten for $90,000 that was bought for $190,000 that was a foreclosure, but I didn't have the time to wait because we needed a place to live. It needed some repair like the pool replastered and the carpet replaced, but over all a steal of a deal

To get a home today you need perfect credit and 10-20% down

Linderbee · February 10th, 2009, 10:48 PM

I have a co-worker that is looking to buy another home & rent out the one she is currently living in. She has good credit (don't know HOW good) and plenty for a down, but she said she was told that because of the collapse lenders just won't do it anymore. Dunno how true that is.

Jersey Girl · February 11th, 2009, 06:14 AM

Quote:

Originally Posted by Linderbee

I have a co-worker that is looking to buy another home & rent out the one she is currently living in. She has good credit (don't know HOW good) and plenty for a down, but she said she was told that because of the collapse lenders just won't do it anymore. Dunno how true that is.

They're no doubt being a lot more selective.

I don't know, HeavyB3. If you think you have the time, effort and money to put into it, then I guess go ahead. If you have any doubts, though, I say pass.

Gaddabout · February 11th, 2009, 06:27 AM

If this is your second home some things to keep in mind:

- You need to come with enough money to get that monthly rent number lower than the market. Lots of vacant homes right now. Very, very competitive for renters.

- You need to have enough cash reserves to withstand maybe six months of vacancy.

- Think in terms of, say, 20 miles or less from downtown Phoenix, but avoid homes older than 25 years.

- Be prepared to do your own maintenance. Not everyone is a plumber or electrician, but you should be able to do your own painting, changing out door knobs, patching holes in the wall, etc. These things will save you big $$$ over time.

MigratingOsprey · February 11th, 2009, 06:38 AM

we know people who just got approved for a 2nd who have no business buying another home - lenders aren't being that selective

however, for investing you shouldn't do it unless you are confident the investment will be at least cash flow neutral

as gad stated, rentals are pretty competative right now, you'll probably need some help in getting the right lease agreements & selectivity of who you are renting to and all the maintenance will be on you

HeavyB3 · February 11th, 2009, 06:44 AM

Quote:

Originally Posted by MigratingOsprey

we know people who just got approved for a 2nd who have no business buying another home - lenders aren't being that selective

however, for investing you shouldn't do it unless you are confident the investment will be at least cash flow neutral

as gad stated, rentals are pretty competative right now, you'll probably need some help in getting the right lease agreements & selectivity of who you are renting to and all the maintenance will be on you

There are lots of 50k homes in Buckeye. Mortgage on them would be around 360 bucks a month. I am sure some need a bit of repair so I'd be picky. With me paying off my car, the 360 wouldn't kill me if it sat empty. I figure that if I rent it out for 650 a month, put the extra money in a savings account to cover repairs, I could sell it in a few years when the market recovers and make some cash of it. I just doubt I can come up with the 20%.. 10k is a lot.

Jersey Girl · February 11th, 2009, 07:40 AM

Quote:

Originally Posted by MigratingOsprey

we know people who just got approved for a 2nd who have no business buying another home - lenders aren't being that selective

Well, they should be. Guess they haven't learned any lessons.

MigratingOsprey · February 11th, 2009, 08:13 AM

I agree that they should be - i know in my gut that they're going to move into the new place that they are buying in todays prices and let their other house foreclose, even though they claim that it's just an investment opportunity that will allow them to pay off some debts down the line

i'm sure you'll find a lender who will get the deal done at 3-5%, especially on a mortgage of that size

keep in mind that you may also have some initial repair expenses and that the banks will want to negotiate with you - also, by most analysis, buckeye will be a little slower to recover so your time frame for any real profit will probably extend beyond a few years

HeavyB3 · February 11th, 2009, 08:19 AM

Quote:

Originally Posted by MigratingOsprey

I agree that they should be - i know in my gut that they're going to move into the new place that they are buying in todays prices and let their other house foreclose, even though they claim that it's just an investment opportunity that will allow them to pay off some debts down the line

i'm sure you'll find a lender who will get the deal done at 3-5%, especially on a mortgage of that size

keep in mind that you may also have some initial repair expenses and that the banks will want to negotiate with you - also, by most analysis, buckeye will be a little slower to recover so your time frame for any real profit will probably extend beyond a few years

I don't mind sitting on it for a while. With me being a teacher in the area, I don't think finding a renter will be hard either. Lots of teachers live in apartments where the rent is higher than what I would charge.

LVG · February 11th, 2009, 08:25 AM

I can't remark to the PHX market - but I can about the Vegas market, and I believe both are fairly similar.

In Vegas, we haven't seen the bottom yet - not by a long shot. My goal would be to wait until we've bottomed out, and try to invest soon on the upswing right after the bottom has been defined.

For example - acre residential lots here in Vegas were running about 400k w/ services. Right now, they're about 250k. I think they will get down to the 150k range - but I will judge that based upon the local economy - I could be wrong and keep that in mind at all times.

Another option would be to buy the land, and to lease it (on a 99 year lease) to a developer to allow them to construct (and take the risk) on the land.

HeavyB3 · February 11th, 2009, 09:57 AM

Quote:

Originally Posted by lvgentleman

I can't remark to the PHX market - but I can about the Vegas market, and I believe both are fairly similar.

In Vegas, we haven't seen the bottom yet - not by a long shot. My goal would be to wait until we've bottomed out, and try to invest soon on the upswing right after the bottom has been defined.

For example - acre residential lots here in Vegas were running about 400k w/ services. Right now, they're about 250k. I think they will get down to the 150k range - but I will judge that based upon the local economy - I could be wrong and keep that in mind at all times.

Another option would be to buy the land, and to lease it (on a 99 year lease) to a developer to allow them to construct (and take the risk) on the land.

I've got some 3 year old houses in Buckeye that are selling for 50k. One of which is 1400 square feet, full tile, upgraded carpet, landscaping completed etc. The pictures I look at show know physical damage to the house. Just an example of how bad it is in some places here.

LVG · February 11th, 2009, 04:53 PM

Yeah - just a word of advice from a GC - if you're going to buy a damaged house, that's OK, but 1) Have someone inspect it; 2) Have someone give you an estimate to repair it.

I just can't say that enough. You'd be surprised how people underestimate the cost of repair work.

Heucrazy · February 11th, 2009, 05:04 PM

Dude I'll sell you my house in Reno right now.

4bdr, 2 1/2 bath, 2 car Garage, 1/3 acre lot.....only $370,000.00 a helluv a deal for Reno.

HeavyB3 · February 12th, 2009, 08:46 AM

Quote:

Originally Posted by Heucrazy

Dude I'll sell you my house in Reno right now.

4bdr, 2 1/2 bath, 2 car Garage, 1/3 acre lot.....only $370,000.00 a helluv a deal for Reno.

Haha I'd never qualify