Could be sitting on a gold mine? or not?

Random Ramblings
1

So I had a talk with a family friend whos a realtor around where I live.

I live in a old military base that stopped being active and open to the public back in the 80’s. Its full of pretty nice little duplex’s and 3 bedroom/2 bath houses. Back in the day (3-4 years ago) a 3 bedroom 2 bath would cost you about 80,000, now you can pick them up for about 40 000 AT MOST.

The side by sides as we call them (or duplexes) usually will run you around 20-25K each.

Anyway… on to my point. I believe I could potentially be sitting in a very good position.

My family friend (the realtor) said shes sold a dozen or so houses this past year for only 8-9K. … and theres more of them. The reason is because this area was never really that prosperous, and its been even worse since GM closed down in Kokomo… so propertys arent worth much, and people dont have money… HOWEVER, people have to live so they RENT (not enough money to buy).

Im sitting with 11K now (was saving ALOT faster, but i went unemployed because my contract with agency stopped, and I had to find a new job), and could pretty easily pick up a property from a realtor around here for about 8-9K with only 2-3K for repairs. Almost all of these places rent for 500 a month, and they fill up pretty easily due to the fact that FOR SOME REASON, people are emotionally attached to this town and refuse to leave despite the crappyness of this town.

At 500 a month, I am CRUSHING the 2% rule that most people go by. I am getting a 4.5% return… and the deals are pretty much everywhere around here. I have always preferred a buy and sell approach as apposed to the landlording thing, but at 4.5% a month return , it would only take me 22 months to pay off that sucker… and everything else after that is gravy.

I dont know what the catch is… because everybody knows these houses are for sale, so could they really good deals just for the simple fact that nobody around here can afford to throw out 10K to buy a property? I mean… idk.

Interested in input from Jake or anybody who has input.

2

The more I read this post, the more I feel like a idiot. Its not like you guys are going to know whats going on in this market… lol

Was more of a rant… sorry. :bobble

3

Take advantage of the “local’s blindness” to opportunity.

I made a mistake of passing up something very similar to what you’re finding, and the guys that were smart enough to buy these were the same ones that were considered geniuses by everyone else much later.

Price $11,000 (including rehab)
Gross Scheduled Income (GSI) $6,000
Vacancy (5%) <$300>
Expenses (30% without management) <$1,800>
Net Operating Income (NOI) $3,900
Annual Cash Flow Before Taxes $3,900
Cash on Cash Return Before Taxes = 35%

Not bad at all.

I would try to buy every single one I could. You could offer sellers some really great terms and still come out smelling like a rose here.

4

Hoosier,

How much are the annual taxes on these homes???

If the taxes are cheap…This could be a nice investment for you.

5

I dont have exact numbers, but I do know, my county is known to be one of the lowest property tax areas in the state of Indiana. Property taxes shouldnt be a ball breaker at all. Cheapp living. Ill look it up and find out more… but things certainly do look good if you have cash in this area right now, since theres so little competitition for buying houses (nobody can afford to buy cash.)

And java… yeah that pretty much looks exactly like the deals are looking and what im talking about.

I guess I was just wondering if these actually could be good deals even though they are open to the public and everybody knows about the prices. Didnt quite make sense to me… the only thing I could think of was nobody has the cash to buy them.

6

Josh,
This is the realm I deal in. I bought a 2/1 with almost the same numbers as what you’re listing. Rents for $500/mo…great tenant.
$10,800 purchase price
$3500 rehab / repairs

Put in service last May. Has brought in $5500 so far.

The issues with other people could be lack of cash / financing or it could be that not many people want to be LL’s. It can be a real pain in the butt with the wrong tenant.
Could be a great opportunity if you’re up to the challenge. Some of those old military homes might have goofy layouts. I lived in one where the washer/dryer were in the kitchen. Many of them also had old “elementary school” floor tile rather than carpet.
If there are that many deals there for so cheap, you could be well on your way to establishing a nice little business. You can buy up several of these houses that are located virtually next door to each other. This gives you a nice advantage. You can somewhat control an area because you’ll be screening and choosing who to put in those houses. It gives you an opportunity to package those houses together for other investors when you want to sell. When you go work on something, you’ll be able to see your other houses too.
Now you need to see the possibilities for financing so you can do deals and not wrap up all your cash in one or two places. Expect to have to put more into the first couple deals until you get things running and can show banks you’re doing ok with it. After that, you may get more favorable terms.

7

Why limit yourself to one house that makes $500/mth when you can try finding a 3 bedroom house and rent it for $250-$300 a bedroom per month? Pay off that sucker faster. I’m not going to suggest to you to turn the basement into another apartment because I don’t know what the zoning laws are in your area. Renting it by room also makes it easier for you to inspect most of the property regularly.