I am looking for some advices here. I just walked around the neighborhood, saw there is one condo for sale by the bank. Asking price 154K. The market value is around 184k. I live in California, and the 2br apt around this neighborhood is about 800/month. There is no way to achieve positive cash flow in a conventional way without a considerable size of down payment. So Im thinkging:
Is it possible to ask the selling bank offer a very low interest rate(3% or 4%), or defer a potion of the purchase price? In exchange, I can take the full asking price or even higher. If I can manage the monthly payment to $520. It is still possible to achieve the positive cash flow.
The market here is falling right now. The houses prices are going down. I know it will go back up in the next real estate cycle, but do you think it is wise to purchase the property now? Or do you think I should wait until the market bottoms out, say 2008 maybe. My opinion to this is: as long as I can achieve positive cash flow, it doesn¡¯t matter which phase of the cycle I am in. I just want to confirm my opinion here, or if Im wrong, I want to know why.
Anyway, Im really new to this business, and am learning. Any advice will be greatly appreciated.
This does not sound like a good deal. It is not wise to use gimmick loans, (neg amortization, etc) as you always have to pay the piper in the end. I’m assuming from you post that your objective is to rent the property. Real world operating expenses for that property will be around $400 per month, leaving $400 to pay the mortgage and any profit.
If you have a passion to be a real estate investor, then moving to a better state might be the answer. The purpose of investing is not to buy something but rather to make money.
CASH FLOW is crucial for rentals. Without a positive cash flow, I certainly would not buy a rental.
thank you propertymanager for your response.
Regarding your comment on removing to another state, i know there areless opportunities in california. So what investors do in california now? i am a beginner here, move to another state will be an option in the future. but i need to get my feet wet first in california. so what should i do here in california?
I have asked that same question and I can’t get a straight answer. I can’t really see how you can make money in real estate in California right now. It is like deciding to become a fisherman in Montana. Yes there are fish their, but not the volume you need to make a living from it. It order to make it a business it needs to be repeatable, and California seems to be like panning for gold. There is gold there, but it may be more work than it is worth. As Keith likes to say, “Move closer to the food.”
Well there is always a way to make money even in CA, you just need to find the right deal. Granted, it’ll be a lot tougher but if you can find something that you know is undervalue and know you can flip for a profit, then who cares where the CA market is at.