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Old 12-22-2006, 10:54 PM
 
110 posts, read 390,444 times
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I am going to be buying a house in NC in the next couple of months. One very important criteria for me is appreciation potential. I view the purchase as an investment as much as a place to live. I hope to return to Oregon someday and it will be hard to buy back into this market if we don't get decent appreciation in NC. We haven't decided for sure where we will buy - I've asked for and received lots of great advice on that - but my question now, for those of you who are savvy about the real estate market, is what to buy. We are looking in the $175 - $200 range. Any advice on new construction vs established neighborhoods, house features that are much in demand (and likely to stay in demand), size, style, lot size, city vs suburb vs rural, etc? What would you buy if you were buying strictly for an investment?

BTW we are moving to Eastern NC. Looking at New Bern, Wilson, Greenville, Goldsboro, and Johnston County.
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Old 12-22-2006, 11:27 PM
 
Location: Wilson
505 posts, read 2,171,302 times
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Quote:
Originally Posted by robin from Oregon View Post
I am going to be buying a house in NC in the next couple of months. One very important criteria for me is appreciation potential. I view the purchase as an investment as much as a place to live. I hope to return to Oregon someday and it will be hard to buy back into this market if we don't get decent appreciation in NC. We haven't decided for sure where we will buy - I've asked for and received lots of great advice on that - but my question now, for those of you who are savvy about the real estate market, is what to buy. We are looking in the $175 - $200 range. Any advice on new construction vs established neighborhoods, house features that are much in demand (and likely to stay in demand), size, style, lot size, city vs suburb vs rural, etc? What would you buy if you were buying strictly for an investment?

BTW we are moving to Eastern NC. Looking at New Bern, Wilson, Greenville, Goldsboro, and Johnston County.

I am not an expert, but I would have to say Clayton is your best bet.....as much as I hate to say it....I just hate towns that are nothing but subdivisions. But Clayton is booming big time, so that is where the money is at.
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Old 12-23-2006, 07:03 AM
 
Location: Martinsville, NJ
604 posts, read 2,502,567 times
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It is always, Location,Location,Location.
Have you ever noticed somebody will erect a new home in a lousy location and that home will sell fairly soon. A few years down the road when that home is no longer "new" it will sit on the market for a long time because of lousy location.

The realtors know what they are talking about when they preach L,L,L


You can always update a home in a good location but when you are in a poor location you are really stuck.

E
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Old 12-23-2006, 07:23 AM
 
199 posts, read 458,930 times
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You could get a much better "investment" than buying a house especially in that range and in this market. Good luck.
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Old 12-23-2006, 08:53 AM
 
Location: Cary, NC
28,433 posts, read 50,566,643 times
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You have to stay in the mainstream. You will be punished for expressions of individuality. IOW, buy what will reward you when you sell.

1. Location, Location, Location. Emanon took the biggest one. I would have to say, close in is better, since there is less available land for new construction. You can buy more home in Johnston County, but land is cheap and most areas are far from fully developed. Sellers will compete with new construction for a very long time. Look at the drive-time traffic, and see if you can find something suitable in the vicinity where folks are going.
2. Avoid "incurable deficiencies," in home or lot. Power lines or substation adjoining, airport glidepath, railroad tracks, landfill in proximity, environmental issues, backing to freeway, rendering plant next door, "unique" home with weird floorplan, poor setting on lot, steep up or down driveway, weird stuff like a fireplace that is twice the size of the room it is in, etc.
3. Try to buy a smaller house in the neighborhood. The big ones will float your value. Classic truth.
4. People want convenience to shopping and other services, not 45 R/T minute drives for milk. I don't see that changing.
5. If other criteria are met, try to get a decent sized lot. Economics of homebuilding dictate that new construction is on small lots, or unaffordable. I think most people would prefer a 1/4 acre or 1/2 acre lot over 1/10 acre. You see it all over these forums.
6. If you can confirm you are in a pod for great schools, that is a plus.
7. One level living is in demand, and I think that will remain attractive as we baby boomers develop rheumatism and other complaints that go with age.
8. If I was buying strictly for investment, it would be rental for cash flow as much as appreciation. Money today! It would not be the same at all as what I would buy to live in. I would look at small SFR's...1100-1800SF. I would also consider duplex to quadraplex multifamily.

Good luck in the hunt!

Last edited by MikeJaquish; 12-23-2006 at 08:57 AM.. Reason: added thoughts
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Old 12-23-2006, 12:32 PM
 
110 posts, read 390,444 times
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Quote:
Originally Posted by lukeb321 View Post
You could get a much better "investment" than buying a house especially in that range and in this market. Good luck.
Probably not, because I don't have that much equity, and I still need a place to live. If I invested $50k equity in another investment at say 15%, that would be an annual return of $7500. If I take a $150k mortgage and invest my equity in a $200k house that averages 5%, that would be a return of $10000, or 20% on my 50k. I know the market isn't good right at the moment, but I think that will turn around with time as the surplus inventory of real estate decreases, and I don't think 5% average equity gain is unrealistic (but please correct me if I'm wrong!) I'm hoping to buy well, which is why I posted, and get more than a 5% gain. I'm looking at holding for probably 5 - 10 years.

The other option would be to invest my equity in something else, and buy a house with 100% financing. Then theoretically I would still get equity gain on the house plus the return on the other investment, but I think the way the market is now it would be very risky to finance at 100%.

I appreciate the advice from everyone. I hadn't considered rental property until I read Mike's post, but that interests me. Maybe keep part of the equity back and invest it in a duplex, and put the rest in whatever house we buy. We could buy a less expensive home for our family (there's only 4 of us). Is it likely to get a positive cash flow without a huge downpayment?
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Old 12-23-2006, 04:13 PM
 
Location: Albany, OR
540 posts, read 1,819,816 times
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Robin from Oregon,
The one thing you need to include in your calculations is TIME! You say you want to return to Oregon "someday" but that investment period is important in determining the value of your investment.
My other thought is to look into a way to take the equity out of your existing home in Oregon by refinancing, KEEP that home as a rental property (even if it doesn't 100% pay for itself, you have tax benefits, depreciation, and the appreciation of the property over time). There are programs that offer you payment options to counter cash flow challenges. Use the equity to make your home purchase in NC and take advantage of both markets individual levels of appreciation, while still being able to get 'back' into the Oregon market later on regardless of the differential between the two areas.
The only risk in 100% financing is that it costs you more for the money, but if you can handle the cashflow...you should be ok IN THE LONG RUN.

Find a finance guy you trust to help you crunch the numbers...there is a lot of risk perhaps, but it may be a good solution.
Good luck...sorry you are leaving Oregon!

Dave
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Old 12-23-2006, 06:14 PM
 
Location: Cary, NC
28,433 posts, read 50,566,643 times
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"I hadn't considered rental property until I read Mike's post, but that interests me. Maybe keep part of the equity back and invest it in a duplex, and put the rest in whatever house we buy. We could buy a less expensive home for our family (there's only 4 of us). Is it likely to get a positive cash flow without a huge downpayment?"

Difficult to get cash flow without a good downpayment. If you can, it is not a very nice area. Low end is where the real cash flow is.
And if the area has been appreciating, it is likely that rents have not been adjusted in proportion to appreciation, i.e., won't cash flow without a down payment.
And I think it would be just about impossible to find a duplex that will cash flow if you live in one side, i.e., the other side will "help" but won't tote the note on 90% or 100% funding.
Maybe a triplex, but you gotta know the sellers can do the math too.
Depreciation and interest expense deduction will give you money back at tax time, though.
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Old 12-23-2006, 07:35 PM
 
110 posts, read 390,444 times
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Quote:
Originally Posted by DavePautsch View Post
Robin from Oregon,
The one thing you need to include in your calculations is TIME! You say you want to return to Oregon "someday" but that investment period is important in determining the value of your investment.
My other thought is to look into a way to take the equity out of your existing home in Oregon by refinancing, KEEP that home as a rental property (even if it doesn't 100% pay for itself, you have tax benefits, depreciation, and the appreciation of the property over time). There are programs that offer you payment options to counter cash flow challenges. Use the equity to make your home purchase in NC and take advantage of both markets individual levels of appreciation, while still being able to get 'back' into the Oregon market later on regardless of the differential between the two areas.
The only risk in 100% financing is that it costs you more for the money, but if you can handle the cashflow...you should be ok IN THE LONG RUN.

Find a finance guy you trust to help you crunch the numbers...there is a lot of risk perhaps, but it may be a good solution.
Good luck...sorry you are leaving Oregon!

Dave
Believe me, we've thought long and hard about that. For one thing, I love my house! The problem is we're in a very small town (Yamhill), without much of a rental market, and while our house is not exactly high end, it's pretty big for a rental. We also have a home equity loan, and even if we consolidated the two mortgages, we would have a serious negative cash flow. But the bigger consideration is managing the property from 3000+ miles away, potential vacancies, damage to the property, and maintenance (it's a 100 year old house, so there WILL be plenty of maintenance!) I might consider buying a more suitable rental property here in a year or two if I could find a good value, and if the cash flow was there.
We have a really big fir tree in our front yard, and I actually thought it might come down when we had that big wind storm a couple weeks ago. I was thinking if no one was home, it might not be the end of the world - the tree would take out the house, we would collect the insurance, pay off the mortgage, buy a house in NC, and hold the lot till we move back. .........lol! Didn't happen, just alot of fallen limbs to clean up.
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Old 12-23-2006, 09:52 PM
 
Location: East TN
1,037 posts, read 3,380,356 times
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Robin,

I'm up here in WA and making the move to NC, in my opinion, if you can sell your home in Oregon for a profit, do that. Do a 100% loan on a house that you want to live in for a long time. My reasoning, it is my opinion and my observation, that home prices are falling and will continue to do so for a while, which may harm the economy quite a bit. The good thing about ringing the register on your Oregon home is invest it, in something safe, take advantage of still historic lows on your new home financing and then if it really hits the fan, worse can scenario, you can hand the keys back to the bank on your NC home or if the price does go up, you take the profit from it as well. I'm for keeping my powder dry at the current time.

Good luck with your move. And to let you know, I'm selling all of my rental homes in WA state and buying some acreage with several homes on it in NC to take advantage of the rental income to pay my mortgage.

Take care.

Tony
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