When to jump into the R.E. investment market (fit in, sales)

[Messing About]

Well I am really wondering if I shouldn't jump into some investment properties.
Some folks on my canal have shared with me that they will be offering their house up for almost half what I paid. I found a clean corner lot, 3b2b foreclosure around the block for $44k. Not a canal but jeez...The payment on that would be like 500?
I could rent it for 7-900.

I know some of you are in this RE Investment market. What else should I consider besides can I make the extra payment? I wouldn't be a cash buyer.

[QuilterChick]

Originally Posted by Messing About

Well I am really wondering if I shouldn't jump into some investment properties.
Some folks on my canal have shared with me that they will be offering their house up for almost half what I paid. I found a clean corner lot, 3b2b foreclosure around the block for $44k. Not a canal but jeez...The payment on that would be like 500?
I could rent it for 7-900.

I know some of you are in this RE Investment market. What else should I consider besides can I make the extra payment? I wouldn't be a cash buyer.

I'll give you my answer which you probably won't like; but you are concerned about that "deal" or you wouldn't be asking.

You're considering what is called bottom feeding. Don't bottom feed. Double that price and get something that is in (a) better condition, (b) better LOCATION, (c) and less headaches. 3 br 2 ba. How many will fit in that house? Just sayin' .........

I am a retired Realtor. Buy more quality, it will always be quality. Everything is relative. yada yada yada.

[HarborRat]

Secure the loan first if you are not paying cash, banks have so many cash offers they don't want to waste time with someone who has to wait on funds. Stay away from wood houses and anything else that will cause the insurance premium to be prohibitive.

I keep my eye on the market and it sure seems prices have gone up lately, that or there are less distressed sales left. Good news is that rental prices have also gone up, sometimes even more.

[HarborRat]

Originally Posted by QuilterChick

I'll give you my answer which you probably won't like; but you are concerned about that "deal" or you wouldn't be asking.

You're considering what is called bottom feeding. Don't bottom feed. Double that price and get something that is in (a) better condition, (b) better LOCATION, (c) and less headaches. 3 br 2 ba. How many will fit in that house? Just sayin' .........

I am a retired Realtor. Buy more quality, it will always be quality. Everything is relative. yada yada yada.

You call it bottom feeding, I call it a good investment when done right.

[wpc691]

Pros - unless you already have a lot of money, real estate is about the only place you can get leverage money to invest.

Cons- eventhough it can be a good investment, if you plan to do everything yourself, an investment property is a part-time job. Every time there's a faucet dripping, you'll be heading there with your toolbox instead of to Bull Bay. Add another couple of properties, and it will be 3 weekends a month. When a tenant moves out, it will be 2 or 3 weekends painting, patching holes in walls, etc. My mother-in-law had a lower end property, and when one tenant left, they took the toilets and sinks. I know you're in the same travel boat as me, so you might want to start putting Stabil in the tank of the old BR 196. If you can put together a string of properties with enough cash flow to support a property manager and contract labor it's a different story.

As always, JMHO :-)

[mr&mrssunshine]

okmy 2c worth. i have been involved in construction/property for 30+ years, seen it go up seen it go down....but long term the trend is always up.

so take a 44g propety. the bank will want you to put down at least 20 if not 25%. lets say 25 or $11k
leaves you 33 to finance, that will cost around $2-250 a month.
add on insurance (you as owner need to cover the home not contents ) and taxes
make a repairs allowance.
see what that comes to a year

Most property investors like to see 5-7% as a return so on 44k lets say $2650 per year PROFIT. if you can do that AND be sure if you dont rent it that you can cover the payments , then I would say do it.
the real money maker can be in the capital growth. one day that 44k house will be worth more ,maybe a lot more.

so providing the payments wont kill you if you have to make them for a few months I would say go for it....where else you gonna get a return on your money these days ???

oh and if you dont -let me know , I always know people interested in buying ( and remember I asked first before Big House !!!) :-)

[TamRE]

Here are some things to keep in mind if you are planning to purchase an investment property. First of all decide how long you plan to own the property. The longer you own the home, the more money you will need to put into it for maintenance, repairs, and improvements.

Don't count on appreciation. With the market the way it is right now, appreciation is not a guarantee. When looking at homes, you want to purchase a home that would have an attractive resale value no matter what the market is like. Obviously you would like to make a profit if you did resell.

If you decide to rent the property, it is necessary to make sure your rental income will cover your out of pocket expenses such as the mortgage payment, taxes, insurance, maintenance, repairs and vacancy rate. Right now, demand is higher than supply. You shouldn't have any problem finding a renter for the home. Check with local real estate agents or call rental ads to see what the going rental rate is within the areas you are looking to purchase a property.

Try an investment calculator such as the one at goodmortage.com. Go to their web site: Should I buy an Investment Property or Rental Home?. This will give you a good idea of the financial situation if you decide to rent an investment property. You can rent the property as annual, short term, long term, and vacation. You can choose to manage the property yourself or hire a property management company to do some or all of the work. This may include items such as marketing the property, handling calls from tenants, collecting rent, doing background checks, and maintaining the property.


There are tax benefits in any real estate investment whether it be rental homes, apartments, vacant land, commercial buildings, industrial, shopping centers, or warehouses. Check with your local tax advisor before entering into a purchase agreement for any investment property to make sure you qualify and follow the strict requirements.

If you are going to rent a property be sure to know Florida's Landlord/Tenant Law. You can find information on this at Florida Landlord/Tenant Law Division of Consumer Services, DOACS.

[DennisDaMenace]

Personally given the current price of homes in Sw Florida. I wouldn't Hesitate to tap into my retirement plan to purchase real estate.

If I pulled 100k out of my retirement account and bought a house that I could rent out of 1200 a month. Right now, that 1200 is more than I make investing, with no appreciation on the house, I come out ahead.

Now if that house appreciates, I am in an even better position. At least that's my take on it.

[QuilterChick]

Originally Posted by HarborRat

You call it bottom feeding, I call it a good investment when done right.

I would watch and wait for a more steady upward market curve. I never buy property when I "think" it's at the bottom. Especially in this economic environment, you cannot "time" the market.

The "numbers" have to work not only now, but steadily in the future. Always add in the unknown unforeseen numbers for vacancies, legal fees etc. etc., and that nasty term "capital gains" if you sell. And .... repeat: ANY property deal is all about location location location.

[Messing About]

Maybe I should just focus on paying my own house off in 15 years. We just refi'd for 30 at 3.75%.
I'll be 47 in September and something tells me we're going to be here for 15 years. I'm still not convinced this country isn't facing a complete economic collapse. This home is the only debt we have and that's a secure feeling. Of course if there's a total financial meltdown, will my good credit even matter?