Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
10 months ago, we bought our retirement home. It remains that to us. We will be doing improvements beginning next june - a deck, inset above-ground pool, hot tub, outdoor kitchen. Funds are already set aside. We have tenants and their rent covers everything except bigger repairs. Even taking out prep work to get the house ready to rent, minor repairs like plumbing, part on HVAC system, and the property mgmt fee; we break even. Our tenants are GREAT! They have done work improving the yard and we are sorry we are going to have to give them a short lease (10months) renewal. Our property manager does a walk thru with them every 3 months and says it's rare to see such care they are giving. So yeah, we're a little spoiled.
But we initially were looking at purchasing a 2nd home (investment) for a friend of ours. She has been in/out of the hospital in the last year and it doesn't look like she's going to be joining us. But we are bitten by the investment idea. Housing prices can't go much lower. I have been watching one house specifically - it has the absolutely ugliest green kitchen floor I have ever seen. It is truly gross. The house needs outside painting but the roof looks solid (this is from pictures only so far). Anyway, the house dropped off my search results on the MLS. I just lowered my search inquiry and guess what is STILL on the market - yup, ugly kitchen house. It is in a great location - not far from hospital but not on a main ambulance route, couple of streets off the main road but near enough to walk to shopping and transportation - and schools and churches.
Oh, did I mention our existing tenants have an infant and a toddler? yeah, so......we were planning to make a major concession to the tenants to remain in the house during construction. For one, their presence keeps our insurance intact (need it occupied) and our mortgage, of course, requires the house have insurance.
Assuming 20% down and a mortgage of 4.5% (probably can get it lower) for 15 years, we are still within very comfortable status on our retirement income to purchase this 2nd home and have it rented out. Yes, we can even afford the payments on both homes if we didn't get a renter for 2nd house. It will not be a hardship to us to pay on both homes.
Are we crazy for going the 2nd house route?
Last edited by NY Annie; 08-20-2010 at 09:12 AM..
Reason: typos
10 months ago, we bought our retirement home. It remains that to us. We will be doing improvements beginning next june - a deck, inset above-ground pool, hot tub, outdoor kitchen. Funds are already set aside. We have tenants and their rent covers everything except bigger repairs. Even taking out prep work to get the house ready to rent, minor repairs like plumbing, part on HVAC system, and the property mgmt fee; we break even. Our tenants are GREAT! They have done work improving the yard and we are sorry we are going to have to give them a short lease (10months) renewal. Our property manager does a walk thru with them every 3 months and says it's rare to see such care they are giving. So yeah, we're a little spoiled.
But we initially were looking at purchasing a 2nd home (investment) for a friend of ours. She has been in/out of the hospital in the last year and it doesn't look like she's going to be joining us. But we are bitten by the investment idea. Housing prices can't go much lower. I have been watching one house specifically - it has the absolutely ugliest green kitchen floor I have ever seen. It is truly gross. The house needs outside painting but the roof looks solid (this is from pictures only so far). Anyway, the house dropped off my search results on the MLS. I just lowered my search inquiry and guess what is STILL on the market - yup, ugly kitchen house. It is in a great location - not far from hospital but not on a main ambulance route, couple of streets off the main road but near enough to walk to shopping and transportation - and schools and churches.
Oh, did I mention our existing tenants have an infant and a toddler? yeah, so......we were planning to make a major concession to the tenants to remain in the house during construction. For one, their presence keeps our insurance intact (need it occupied) and our mortgage, of course, requires the house have insurance.
Assuming 20% down and a mortgage of 4.5% (probably can get it lower) for 15 years, we are still within very comfortable status on our retirement income to purchase this 2nd home and have it rented out. Yes, we can even afford the payments on both homes if we didn't get a renter for 2nd house. It will not be a hardship to us to pay on both homes.
Are we crazy for going the 2nd house route?
1. Yes you are spoiled by your tenants. Law of averages says if you continue to do rentals you will end up with a psycho tenant eventually.
2. Friends/family and business doesn't mix. We have rented to family in the past - and are actually in the midst of a very complicated and tense legal situation right now - and will never do it again. It's pretty similar to the train of thought of "don't lend money if you can't afford to give it away" ... it's just one of those situations that most likely won't end up well.
3. I have a personal rule that all of our investment properties have to be local to us ... and in a neighborhood that I wouldn't be scared to get out of the car. Even with a property manager, it's really not the ideal situation to be a long distance landlord.
NYA... Nows a great time to by investment property with the prices being rock bottom, unbelievable interest rates and most importantly there is a huge demand now for rental homes (in our area).
I've bought 3 investment homes over the last 3 years and I like to do it with the minimum of debt. I'd pick up a few more but I've reached the maximum I want to play landlord. I bought my son's almost brand new home last year when he moved to the west coast. I have a great tenant in the house who pays early and treats it like it's his own home.
I say go for it since you have the funds and with a little work sounds like you'll have a good investment.
Better yet, build a MIL suite out back of your new home so your CD Buddies like me can have a place to stay when we come out your way. Know what I mean?
This assumes you'll be living down that way soon to oversee the property & do repairs.
Better yet, build a MIL suite out back of your new home so your CD Buddies like me can have a place to stay when we come out your way. Know what I mean?
This assumes you'll be living down that way soon to oversee the property & do repairs.
ROFL Rakin - how's the roofed screen porch on the deck for my CD buddies? Oh heck, we have 3 bedrooms - well, I think it'll be two after we move in - I have plans to consolidate 2 into a master suite. You and your lucky wife will be welcome to visit.
11.5 months to go. We'll still keep the property manager (no phone calls for us) but my husband will take over the repairs. He has to keep busy once he builds the outdoor kitchen and pool shed with 1/2 bath and a separate shower and tears down a wall in the house to expand our bedroom and builds me a storage shed and the raised bed garden I want and plants the fruit and nut trees. The rest of the landscaping will be done slowly. I get to tend the veggies and the trees and can/preserve. I'm also planning to go back to school. I can't wait to retire!
ROFL Rakin - how's the roofed screen porch on the deck for my CD buddies? Oh heck, we have 3 bedrooms - well, I think it'll be two after we move in - I have plans to consolidate 2 into a master suite. You and your lucky wife will be welcome to visit.
I can't wait to retire!
That back porch would work fine for me but you might need to share a room with my wife. She likes that girly indoor stuff like air conditioning and no bugs.
Have you checked on how much you can lease the home and what will be your payments ? When you figure income always figure the house being vacant about 1-2 months a year in lost income. My goal would be to get it paid off ASAP so you'll have the extra income.
Sounds like a nice retirement. Can you give up the excitement of the big city ? I think I could as well.
That back porch would work fine for me but you might need to share a room with my wife. She likes that girly indoor stuff like air conditioning and no bugs.
Have you checked on how much you can lease the home and what will be your payments ? When you figure income always figure the house being vacant about 1-2 months a year in lost income. My goal would be to get it paid off ASAP so you'll have the extra income.
Sounds like a nice retirement. Can you give up the excitement of the big city ? I think I could as well.
As I said, we'll still have a spare indoor room. No bugs in the screened porch - that's why I want a screened room - lol. I hate bugs.
Yes, we know we can rent it for the same as what we have our house rented for - and it's listing for less than the asking on our current house. Already checked into the actual taxes, insurance, and assuming the same "high" mortgage rate that we have (under 5% but not under 4% that we're hoping to get), it will cost us less each month than our current house. So double what we pay now and it's totally affordable. We'll just stop making double payments on our current house.
Giving up the city life. Oh man - we are basically out in the country right now - we have 250 acres of "back yard". Although we have a "semi-detached" house (rented from Uncle Sugar at nearly 5 times the mortgage et al on our house in TN), we have the clampets as neighbors. I have been to Manhattan once in the last 12 months and that's enough for me. I do go to Brooklyn to get my hair done but I won't miss it. I cannot wait to move away from neighbors and give up the traffic noise from the bridge. Sometimes the vibrations are so loud it makes conversations difficult. I remember when I first moved to RI - listening to those danged noisy crickets and frogs at night and the birds chirping all day. Hmm, except for the frogs, we have that here. I'll deal with the lack of traffic.
Where ever I hear "can't get lower" I get worried, just as I got worried when I heard "can't lose", "sure thing", "no brainer" and a dozen other things that had MAJORLY reversed.
To be blunt, have you checked the foreclosure numbers for the ares you are eyeing ? How about unemployment? Vacancy rates? Time on market? In my neck of woods none of these has shown the kind of "all good" I really want to see. To be sure, people are not in the full bore panic that they were when McCain and Obama had dueling "sky is falling" pronouncements a while back, but neither is there much reason to be overly optimistic.
Is the place with the ugly green kitchen really significantly under priced? What sort of deals are bottom feeder investors getting on foreclosures nearby? If you need to compete with them in either the near term or over a longer horizon, does it make sense to UPGRADE anything?
These are serious money sucking questions that I woukd spend some time really rolling around with before I decided that having multiple properties is the right path to pursue...
If you do move forward work your offer to get the absolute best price possible. G0 a little lower then you think you should without insulting the seller and when he can say "No" you know you're too cheap.
With investment property, it's not what it's worth but what you can get buy it for. Buying right is the goal to getting a good ROI.
BTW, Personally I think you're wise to head south. Should be a slower warmer lifestyle, just keep your AC tuned.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,302,067 times
Reputation: 6471
Quote:
Originally Posted by NY Annie
It is in a great location - not far from hospital but not on a main ambulance route.......
I'm just curious having spent time as a volunteer firefighter, what the heck is a main ambulance route?
Around these parts, the ambulance just drives to the scene and then drives to the ER.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Even with a property manager, it's really not the ideal situation to be a long distance landlord.
Not being pessimist, more devil's advocate...
