Not sure this is in the right spot. I am getting many replies from people wanting to sell their houses and since I am a newbie I’m uncertain as how to approach them. These houses are in the 400,000-500,000 price range with payments of 2000.00 a month and more. Equity ranges from 25,000 to 30,000. Are these good deals? They are not in foreclosure and I haven’t, but will find out if any are in default. I have not made any offers yet as I cannot afford the payments on these homes. Would really appreciate any suggestions. These homes are in different areas of Northern CA and quite a distance from where I live.
Thanks
Char
Do you calculation. Pass on that small amount. Waste of time. 100,000 is better.
I’m a bit short on time so will keep my sometimes lengthy posts short here.
First, use caution if you’re looking to buy high end homes and are not fairly close to where the investments are located, unless you are in a good financial position and have competent personnel on the ground in the location of the investment to help you with whatever your strategy is for the investment, be it short term turnaround ( in which case you’ll need a good agent, and I mean a GOOD one, someone to help with the inevitable fixup that almost all purchases require, etc) or long term rental (in which case you’ll need a good property manager experienced with the type of property you have). My rule of thumb is to keep the mainstream investment circle to about 1 hr radius of where my team and I are located.
Second, you MUST know WHY you’re buying the property and understand thoroughly how to run accurate AND realistic proforma projections for that type of investment. Are you buying to resale? To keep as a medium or long term rental? Other? This will affect what determines if a property is a good value or not.
Unless you have your income is sound for living and you have some reserves I suggest starting with smaller investments. I recognize that is easier here on the east coast than CA. Just make sure you have your ducks in a row before jumping into investments of 1/2 million in size and that you have your numbers well thought out. Don’t forget buying costs, carrying costs, and selling costs including agent commissions in addition to fixup, taxes, insurance, utilities and so forth. They can add up quick!
In a nutshell, if you’re looking at a property with a FMV of $500K and it only has $25K equity going in it’s likely a marginal deal unless the property is in mint condition and you can handle waiting for appreciation to give you profits to make it worthwhile. In general investing on appreciation has a bit of speculation to it and thus I tend to not go into investments on this basis. In some limited markets it makes sense (on the east coast here this is usually limited to fast growing metro and beach areas). I recommend investing for appreciation only to those who are financially sound already, which may be your case.
Best of luck.