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Look can you afford it? Yes! based on your financials that you posted. If I were you I would buy it outright with cash. Screaming deals in Florida right now. Why make payments? Save like a scrooge for a year and BAM instant real estate. I would rent it out as a vacation property managed by a great PMC. Look at all the great vacation areas in Florida and decide where you would like to vacation for the next ten years. Why the hassle being a land lord. Forget that mess. Vacation only. Then if you tire of it in 10 years since you bought in a down market in a prime vacation spot I am sure you could turn it for a profit. IMO.
Just so you know I have a cabin in the mountains here in California I bought in the early 1990's. I don't rent it out but I could sell it now for twice what I paid for it even in this down market.
Look can you afford it? Yes! based on your financials that you posted. If I were you I would buy it outright with cash. Screaming deals in Florida right now. Why make payments? Save like a scrooge for a year and BAM instant real estate. I would rent it out as a vacation property managed by a great PMC. Look at all the great vacation areas in Florida and decide where you would like to vacation for the next ten years. Why the hassle being a land lord. Forget that mess. Vacation only. Then if you tire of it in 10 years since you bought in a down market in a prime vacation spot I am sure you could turn it for a profit. IMO.
Just so you know I have a cabin in the mountains here in California I bought in the early 1990's. I don't rent it out but I could sell it now for twice what I paid for it even in this down market.
hello all,
I have a question and would like to get your un-biased opinion on the matter...
I just turned 30, married, no kids.
I make 120k as an Engineer and have 87k in 401k savings (~100% stocks), 6 months emergency cash, another 15k company stocks, 150k equity in a 500k house, and my wife has some additional cash for emergencies as well. (~50k)
We have no debt. (other than mortgage)
I wanted to buy a condo/TH in Florida to rent out and pay off quickly. 2 bedrooms are going for under 100k and easily cover their own rent. my question is whether that's a good idea, or whether i have enough risk in my portfolio not to do that.
i would be hiring a property manager since i'm a thousand miles away in the DC area.
Please let me know if you can think of any tips/pointers.
Thanks in advance.
If any of this is presumptuous, I apologise. There wasn't enough information to give proper tips from my perspective. I'm your peer in just about all the areas you mention, so hopefully I can provide a little insight...if I were in your shoes.
It seems to me that you have a great thing going already. Relax and be patient. At your income, age and with your mortgage, you are already fairly top heavy in real estate. This is especially true if you obtained your mortgage within the past 5 years and it's financed on a 30 year term. I would not look at the equity in your property as part of your net worth or something to borrow against (if you are considering that at all.)
Hypothetically, If you needed to sell the investment property within a couple of years, you would take the fall on the closing costs, finance charges as well as the listing fees. This could amount to a hard cost of around 10% of the purchase price, which would most likely eliminate the meager ROI you would achieve between rental proceeds and appreciation on the property.
And then there is the distance. Why Florida? Why give your profit to a property management company? If you are thinking of using it as a vacation spot for you and the Mrs. or a convenient spot to visit Aunt Mable, forget it. It's against the mission statement...it's a rental property! Rental properties need tenants. And what if the water heater blows? Would you sleep well at night trusting "your" property management company to handle things?
If I were in your shoes, I would relax. Maybe in a few years you can find a local investment bargain and pay cash for it. I wouldn't like the stress of having two financed homes on one income. Even if Florida is considered an undervalued market and you might kick yourself in 10 years for not going through with it, you are considering making a purchase that will add a lot of burden and unnecessary concern to your life.
If you are hell bent on becoming a landlord, choose one close to home so you can inspect it and use the proceeds to visit Florida...for whatever reason you like it down there.
I think real estate is a game best played with cash. You would be better off bumping up your 401K, opening a seperate Roth IRA or perhaps a CD Ladder (for short term goals like a car or vacation fund).
You are poised to win the race slow and steady...why do anything at this point that would take away from enjoying life right now?
I'd take CD ladder out, and work on dividend paying ETFs/Funds.
In the meantime, I get the idea that you still won't settle till you have the FL property...you can play the game, but use that engineer OCD to your advantage..research!
If any of this is presumptuous, I apologise. There wasn't enough information to give proper tips from my perspective. I'm your peer in just about all the areas you mention, so hopefully I can provide a little insight...if I were in your shoes.
It seems to me that you have a great thing going already. Relax and be patient. At your income, age and with your mortgage, you are already fairly top heavy in real estate. This is especially true if you obtained your mortgage within the past 5 years and it's financed on a 30 year term. I would not look at the equity in your property as part of your net worth or something to borrow against (if you are considering that at all.)
Hypothetically, If you needed to sell the investment property within a couple of years, you would take the fall on the closing costs, finance charges as well as the listing fees. This could amount to a hard cost of around 10% of the purchase price, which would most likely eliminate the meager ROI you would achieve between rental proceeds and appreciation on the property.
And then there is the distance. Why Florida? Why give your profit to a property management company? If you are thinking of using it as a vacation spot for you and the Mrs. or a convenient spot to visit Aunt Mable, forget it. It's against the mission statement...it's a rental property! Rental properties need tenants. And what if the water heater blows? Would you sleep well at night trusting "your" property management company to handle things?
If I were in your shoes, I would relax. Maybe in a few years you can find a local investment bargain and pay cash for it. I wouldn't like the stress of having two financed homes on one income. Even if Florida is considered an undervalued market and you might kick yourself in 10 years for not going through with it, you are considering making a purchase that will add a lot of burden and unnecessary concern to your life.
If you are hell bent on becoming a landlord, choose one close to home so you can inspect it and use the proceeds to visit Florida...for whatever reason you like it down there.
I think real estate is a game best played with cash. You would be better off bumping up your 401K, opening a seperate Roth IRA or perhaps a CD Ladder (for short term goals like a car or vacation fund).
You are poised to win the race slow and steady...why do anything at this point that would take away from enjoying life right now?
Quote:
Originally Posted by VJP
I'd take CD ladder out, and work on dividend paying ETFs/Funds.
In the meantime, I get the idea that you still won't settle till you have the FL property...you can play the game, but use that engineer OCD to your advantage..research!
thanks guys.
I'm not "hell bent on becoming a landlord"....i'm already a landlord on a condo i bought right out of school in 2004 for 225k and is now worth 175k! it is renting and yes, it 'can' be a hassle. The main reason i wanted to explore buying in FL is that the market is literally down 75% or so in the area i'm buying and i figured it might be a good investment and plus, it's an area we've been to 3 or 4 times and we love it. as far as maintenance issues you mentioned, an insurance policy would really take care of that....i used to have the policy on the condo i'm renting now...it was 450 a year and a deductable of 50 bucks, and they would send someone to fix problems whenever there was one. i wouldn't even have to deal with any of it. the tenant would simply call me, i'd call the insurance company and put them in touch with the tenant and boom. done.
Anyway, a part of me wants to 'relax' as you suggested and just take it easy and not put myself through the stress of being a remote landlord but the other part of me wants to make sure i don't miss out on the opportunity of a life time! I'm already maxing out 401k and i already refinanced to a 15 year mortgage on the primary and we're paying extra (5200 on a 2800 mortgage) so we'd be done with the primary house mortgage in 6 more years.....i'm not sure if collecting cash is the best option at my age. I am going to look at ETFs though. thanks.
VJP, as far as research, i have 3 agents in FL searching for properties for me and sending me a dozen listings daily. i still haven't found anything that i like....but i'm pretty sure about the area i'm interested in.
There are more safe deals than Florida right now. Florida is going for the home run with equity, no way around it. Florida real estate is nothing but a history of booms and busts. If you want to get involved in that and understand it then take a small shot, but you could be waiting a long time for your payoff. More importantly you have to set goals and sell when you hit them. Florida catches the greed in people like nothing else. People come up with all kinds of excuses to throw logic out the window when it comes to housing there.
i can understand your point, but believe me when i say that asking 'strangers' as you put it, often helps me think about my problems differently. different perspectives help me figure things out or at least make sure i haven't missed a point of view i hadn't though of.
i don't want to go to 'one' financial adviser, because i've been to two in the past for different reasons, and 1. i want to make sure i get many different point of views and not just one. what if the adviser is biased? and 2. my experience has been that the advisers that i've dealt with, don't do much more than i could do myself. and in one of the two cases, the adviser was a complete moron (and he worked for schwab).
Anyway, i hope that helps.
Stick to advisors who charge an hourly fee and get no commissions or control of your accounts. Keep them handy for deals like this one. Tell them your whole financial situation and what investments you are considering and ask for a professional opinion. Basically treat them more like you would an accountant not a sales person
Anyway, a part of me wants to 'relax' as you suggested and just take it easy and not put myself through the stress of being a remote landlord but the other part of me wants to make sure i don't miss out on the opportunity of a life time! I'm already maxing out 401k and i already refinanced to a 15 year mortgage on the primary and we're paying extra (5200 on a 2800 mortgage) so we'd be done with the primary house mortgage in 6 more years.....i'm not sure if collecting cash is the best option at my age. I am going to look at ETFs though. thanks.
That's awesome. But I wonder how is that possible on a $120k income. Or are you dual income?
That's awesome. But I wonder how is that possible on a $120k income. Or are you dual income?
dual income.....but we don't use her income at all. just saved as cash.
what do you mean how? after 15% to 401k, i spend 5200 of the 6200 take home on mortgage, and the remaining 1000 covers pretty much everything else.
we don't go out often, buy on sale, don't have an expensive phone plan, no car payments (buy newer cars that have low maintenance with cash)...etc. We do travel a lot though because that's our passion.
dual income.....but we don't use her income at all. just saved as cash.
what do you mean how? after 15% to 401k, i spend 5200 of the 6200 take home on mortgage, and the remaining 1000 covers pretty much everything else.
we don't go out often, buy on sale, don't have an expensive phone plan, no car payments (buy newer cars that have low maintenance with cash)...etc. We do travel a lot though because that's our passion.
Ah, that makes more sense. Based on your previous posts, it sounded like you're single income. I asked how because what's leftover from your income alone after paying the mortgage would make it impossible to pay regular bills, save for things (like travel) AND have some for fun.
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