My husband and I are considering purchasing a single family home for a rental property. We are in Kansas the property is in florida. There will be no realtors involved in the deal. Do we need contracts specific to Florida or are they general contracts that work in all states??? This is our first attempt at investment property purchasing!!
Thanks for the help…
Are you actually going to be making money with this one each month, instead of losing money like most “investors”? Your income will be greater than your monthly expeses?
Yes, our numbers show we could make $100 + each month.
Are you figuring Insurance/Taxes/management fees? Just to make sure and vacancy?
Contact a title company in Florida, they should be able to help you close the deal.
I’m not sure that I understand why someone would go from Kansas to Florida for $100 a month, but each to his (her) own…
Certainly there are positive cashflow possibilities in Kansas…? I almost took a job at KU and did some research in the Lawrence area, so I know that they can be had.
Is there some other factor here (like huge appreciation) that you are counting on?
Personally I would look for a better deal. But at least it is positive. Most of the fools I see are buying and renting for losses upto $1000 per month, OUCH! Kansas has to have some good deals up there. I would look around locally before jumping on the Florida Bandwagon! Remember don’t “invest” (gamble) into market because that is what everyone else is doing, that is fastest and easiest way to lose money!
Maybe they want to take a tax deductible vacation to FL every year?
You better read up on the Real Estate issues… they were just talking about targeting home buyers who purchase in “vacation” hot spots and making them pay more money. Also, you really aren’t making $100. You still have do maintenance and if something big breaks down, your budget of $100 profit a month is already shot. Even if the tenant pays the water/sewer bill. A single really isn’t that profitable, but a double would be and you’d make more money at it.
Also don’t forget that if you don’t live there, you are still subject to the “capital gains tax” on non-owner occupied rental property. So if you buy low now you sell it later, you’ll still have capital gains. Also, if you sell it before 12 months, you’ll be taxed at the 35% tax bracket instead of 10-15% bracket if you hold it for 12 months or longer.
Yes I agree the $100.00 so called profit is tight, I personally wouldn’t do that kind of deal. Some people are too busy trying to get into a “hot” market without realizing that they too might be a fool. Once I read that someone from Kansas was buying rental property in Florida, that is a sign of a Bubble, next all I need is the shoe shine boy telling me he is buying brownstones in the city…
Also I never worry too much about the “tax man”, if I did I might as well stop working, collect welfare, live in a cardboard box, because Taxes are everywhere!
If I was reasonaly sure of the $100 positive AND the house was in good condition AND it was near to me, I might invest in it if I could get the right terms. You’re a couple of rent raises away from a decent positive. In this area, clean and decent properties have a low vacancy rate…
I certainly wouldn’t turn to Florida for $100 and HOPE for appreciation. I wouldn’t even go to Texas for that and it’s only 25 miles!
I too would look for a better deal, closer to you – especially for your first purchase. I like to keep an eye on my investments.
I’ve done the long-distance rental thing The rent came in on time every month and I never heard from them – so far, so good. Then I had occasion to get out to that state and decided to visit my property. I about had a heart attack. The damage was amazing – this couple apparently was very physical in their fighting and clearly they had regular disagreements. They also decided to retrench the yard with picks – who knows, they could have used them chasing each other through the house too from the way the interior appeared. I have learned some expensive lessons in this business – hire a property manager, especially if you live nowhere near the property. In this case, it would have saved me a fortune.
I have to laugh at the second part of Dan’s quote. It’s so true! Lately, people are outbidding me on properties in need of SERIOUS work and they are paying close to the initial asking price. There is absolutely no way they are making any money. It’s driving me nuts, but I’m being patient and following my business plan. I sure wish they would put their money back into the stock market and stop making our business so difficult 8)
Take care all,
Don’t let the outbidding get to you! Patience my friend – slow and steady will win this race! If they are paying near retail for a fixer-upper, they will almost certainly have a negative cashflow. Then it’s left to a little bit of income tax gain and an “appreciation speculation”!
Thanks for all your input.
The property was actually a single family home next door to my sister who feels the area is becoming a very good place for rental homes. She and her husband would do the maintenance and “property management” for us and that figure went into the calculations neting us $100 per month. We have decided that we would be more comfortable starting out close to home. Just need to start investigating nearby areas. We are in Overland Park, Ks.
Ahhhh…an unknown piece of the puzzle!
I still think you did the right thing passing…for what it’s worth.
I think you should be able to find decent enough bargains in the Kansas City suburbs…
Thanks…we feel much better about it as well!!! We are new to this area so it will just be a matter of getting to know it better…any suggestions for getting that done quicker and easier? Use a realtor?? Don’t have many contacts here yet.
I have a trusted realtor…many do not. I find a lot of properties on my own and then get my realtor involved (sometimes I think she wonders how I find them!)…as a NooBie, I would find a good realtor.
Start looking through www.realtor.com for homes in your area. Keep your eyes out for FSBOs. Pick a few target neighborhoods and ‘farm’ them…
As for the $100 a month property in Florida, you were just one aircondtioner away from a negative cashflow for 2 years! The numbers were just too close for such a great distance.
I do the same thing as KDH; use a very trusted realtor but do a lot of mine own leagwork. about 50% of the time I find my own deals ad then get her involved; likely she has pointed out a few sweet deals to me as well.
You know, I’m starting to think Keith and I are running the exact same business plan and this makes me feel GOOD! Keith is a smart guy. I too have a trusted Realtor (actually two now – neither one knows of the other lol).
Some other resources for you (besides the sage advice from Keith): http://www.hud.gov/buying/index.cfm (HUD Homes) and http://www.ocwen.com/reo/reofindbystate.cfm (VA Homes). I personally LOVE the VA. They don’t mess around with you once they’ve accepted your offer. And, they treat their homes for termites (in Georgia) before any sale. This is very valuable. You can also get a termite letter out of them, even though they will tell you it’s “As Is,” just be persistent and very nice. “Please” goes a long way with them. You can only bid on HUD and VA houses via a realtor they’ve approved – very easy to find they are attached to the property sites, but don’t get confused with them actually being a good realtor – OMG the stories LOL.
HUD changes their rules as the wind blows. HUD homes come up and are initially offered to “owner occupied” – sign up it’s free and they will e-mail you when they add properties to your designated areas. HUD doesn’t mess around, they move TONS of properties and every quickly. If the property sits, HUD will lower the price and eventually move the property to “General Occupant.” That is when you can make your move. HUD also provides a very detailed inspection form for each property (this includes their determination of cost of repairs – they are way off. I am almost ready to call their people and ask where they pull their numbers from – Venus or Pluto?). You will know what is wrong with it though which is a major plus – anything close to nice, goes for retail (in Georgia).
The VA site – these guys are slow to move their properties. Their realtors are brain-dead. Use that to your advantage. If they don’t call you back, call them again and again. Give it a go and tell the realtor (when they finally get back to you) that they don’t need to waste their time, you are an investor and you’d like the lockbox code to the property (VA properties always have their own box, just like HUD, but HUD has a key a Realtor uses). The VA doesn’t change their code property to property (in Georgia LOL), so I just use the same code to get into all of them ROFL. It’s great! 3/4’s of the time no one even knows I’ve seen the property.
I hope this helps – you’ll do great – learn your market.