I am hoping someone can help we with a property that I am looking at. It is a 2BR, 2Bath 1200Sq. Ft Condo. Here are the details:
Existing Mortage: $31,500
Back Mortgage Payments: $3000
Back HOA Debt: $4000
Back Taxes Owed: $2000
Annual Taxes: $800 - $900
Rents in the same complex for comparable property: $700 - $750/Month
Current Monthly Payments: $400 (This includes an escrow that is responsible for the taxes)
Current Monthly HOA Dues: $250
Here is the situation:
This property belonged to a friend of mine’s father who has passed away. The property is currently going to be foreclosed on in the next two weeks. The mortage is not assumable. The son is not officailly the executor of the will because he has not gone through probate. The mortage company says they will pay off the back taxes if we bring the mortgage company current. I would prefer not to use my credit to put a new mortage in place. But I could if absolutely needed.
Here is the way I see it:
It will cost me approx. $7000 to get into the property. The cash flow statement will look something like this:
+$700 - Rent Income
-$250 - HOA Dues
-$400 - Mortgage (Which Includes Taxes)
=$50 - Approx. Cash Left Over
Do you think the property is worth dealing with? The property looks good all appliances are in working order. The grounds of the complex also look very good and there is a security guard on duty. I also think that I might be able to get $750/month rent but I am trying to be conservative.
jchumle,
What do you want to do with it? What’s it worth?
It’s certainly not a keeper with these numbers and potential additional assessments. If you could get in and get out, then perhaps, but it’s been my (limited) experience that condos take a while to move. I’d look long and hard before buying.
I was planning on keeping it to rent. I have spoken with a couple of real estate agents and they both gave me the same number of about $40,000 for its value based on recent sales in the same complex. I did do a title search on it and these are the only liens on the property.
You would be better off xash flow wise with a CD or better yet loaning me the money. I will pay 2 to 3 % per month for down payment funds on cars and houses. You also have no equity. With that kind of money down you should be able to find something below market value. I am sure you could buy a 100 condos thru MLS for market value. At that price too it must be in a low income area which will take longer to appreciate in value. Hope my opinion helps
JC,
I wouldn’t want it for what’s owed on it, whether to keep or sell. There’s no equity and it won’t cashflow. Even if your motives include trying to help a friend, there’s no reason to take this one on. Since the borrower is deceased, there’s no downside to letting it go that I can see. I’m not trying to be heartless here, but I don’t see a reason to get involved.
Keep looking. Look at 50 more possibles and you’ll then have a better idea of what makes a “deal” according to your situation and criteria. This one isn’t even close.
I’ve only owned one condo. and I won’t be buying another anytime soon… unless I can get if for less than 50% of what it’s worth.
The HOA that my condo belonged to was a complete nightmare. Tim is right it takes longer to move condo’s. It took about 9 months to sell that thing. We lost several contracts because of the HOA.
I’ll never forget what this little old man told me when I was trying to sell my condo. He said “son, condos are like herpes, nobody wants em’ and you can’t get rid of em’.” :oops:
I’ll never forget that saying.
Just my opinion… others may love condos, but I don’t
(This is a post I did on CREO in 99. Please note numbers 9 and 18. Some comments won’t make sense as they relate to popular threads at the time. It was titled “Lessons Learned During Rookie Season” and can be found here… http://www.reiclub.com/success-stories.php?id=35)
I found this site about a year ago when I decided to get serious about getting active with REI. It has been and continues to be my favorite resource. I thought my comments might benefit others just starting out and perhaps the more experienced might chuckle.
This list is by no means comprehensive and is not intended to serve as advice. I’m learning as I go and this is merely a reflection of my experiences. Please do not try this at home or with anyone else’s home for that matter!
Listening to tapes daily in my car does not make me money
Most retail buyers cannot visualize new paint and carpet
Landscaping/curb appeal does make a huge difference
150k houses in which someone has been shot to death don’t move quickly regardless of price
Online auctions don’t work
What works for me may not work for someone else, and vice versa
Any type of marketing I do works, as long as I do it and follow up
Posts on this site by any of the following must always be read regardless of content (Alcorn, Piper, Garcia, Eric C, Couch, Cook, Gatten, Bronchick, Branstetter, Rob-FL, Alexander, and all the others I’m forgetting)
Screw condos, especially those with gated access :flush
Combo lockboxes are great for worker access, not so great for prospects, if I actually want to lease or sell the place
I was warned about many of my lessons in the courses I have, but didn’t hear them until the second time through
I have enough knowledge to talk a seller’s assets off and consequently lose the deal, yet I know nothing
The search feature on this site is like God - you can’t sense it in any tangible way, you just have to have faith it exists
I can’t always correct my own spelling, much less everyone else’s
Listen to those who rant about cash flow, equity don’t mean squat (especially in Texas)
I can’t make my spouse as excited about REI as I am
Lonnie’s books must be really good (on my Christmas list)
Did I mention screw condos? :banghead
Gatten and Alcorn should individually write “The Chronicles of a Real Estate Investor” - it would be a NY Times Bestseller, and/or they could invent a video game with little Pacmen chasing woodchucks around
Property Management Companies are useless
I’m going to have to learn the paper business if I want to be good at REI
Many, many people talk, most don’t walk it
I don’t want to do PBJ’s and Kraft Macaroni and Cheese again (sorry, Rob, and I agree to keep my J.O.B. until I’m ready, too)
I’ve got to get more organized so I don’t have to scramble with each deal
Don’t spend money on a house I don’t own
Peculiar, but a seller will always take a L/O over a subject to, if I’m stupid enough to present one against the other
Realtors don’t like to be screened by an answering service
I’ll probably never fully implement everything I already know, yet I know nothing
There’s no right way to do REI, just my way which continually evolves
I have to buy at an absolute maximum of 80% of value regardless of my exit strategy if I want to allow room for my errors
If I buy “right”, I can screw up left and right and still make a chunk of money
Access to Lines of Credit starting out made me weak
I know what walking on an 11" differential in the slab means now
There are only two possible outcomes, success or quitting
Anyway, that’s my list for now. What will year 2 bring? I’m looking forward to putting faces with the names in Atlanta. Thanks to all of you for all you have contributed to my education.
That list is great! :dance I discovered CREonline last summer and have been addicted since. I’ve been studying REI for over 3 years now on my own. I recognized many of the names mentioned on the list.
What really amazes me is how helpful so many people are. :bouncemulti I know there are greedy people out there who don’t want to share their secrets, but I’m continually amazed at how generous so many people are with their knowledge. I hope to be one of those people in a few years. Right now, I’m gathering all the information and trying desperately to keep it catalogued upstairs. :banghead I want to make smart choices without over analyzing everything (that’ll be hard). Thanks to help from so many people hopefully I’ll make the best decisions. Funny, I sure have used those words “smart choices” a lot when lecturing my kids. Guess I need to remember them too.
Thanks again for your post and all that you and the others do to help us novices. :thumbsup
I forgot to mention the one that hit home the most. Number 16. My husband is supportive, but really could care less about REI. I’m sure I’d get his attention if I either made or lost a bunch of $$$. As of yet, I’ve done neither. In his defense, his job is very demanding and he doesn’t have time to learn about anything else. When he’s not working, he rather be running or cooking.
That’s the same question everyone else asked at the time.
It was a small house, perhaps 1,000 sf, and the difference between the front part of the slab and the back of the house was 11". When I let go of the front door, it literally slammed shut as if aided by a poltergeist. It was difficult to walk the house.
In his defense, his job is very demanding and he doesn't have time to learn about anything else. When he's not working, he rather be running or cooking.
:bs
Sorry, don’t buy it. Everyone’s life is “demanding”, yet we get things done if we want to (like running and cooking). In my mind it’s simply a matter of desire. When I first started REI actively, I worked 60 to 70 hours a week, sometimes more, sometimes traveling. We had two kids under age three. I averaged about a deal a month.
How many folks have you met that weren’t “busy all the time”? My guess would be very few. Yet, why do some folks get so much more done? Prioritization of desires. If folks would give their TV’s to Goodwill, it would be like gaining four extra days a week. Sorry for the soapbox - I’ll shut up now. :oops:
Even money won’t do it. My wife did her one and only deal years ago and netted something like 15k with minimal help from me. It didn’t kindle the desire.
Yes, being a bonified member of Analytics Anonymous is rough, but it can be overcome. I’m proof. :dance
I agree with what you said. He would simply rather be running or cooking. REI is my thing and he respects it. It would be nice sometimes if he would get as excited as I do about it. I think he’s afraid to be too encouraging or I might screw up. LOL. Who knows, maybe one day. I started running because of him (not cooking, though).
there is hope. I have been doing this for 2+ years and am closing on my 2nd deal this week. I kept thinking that if my husband could understand what I was so excited about it would be better. Like your husband, he is very supportive but he chooses to spend his time in other ways. I actually talked him into going to the Houston seminar in April with me - of course I sold it as “lets get my parents to come down and babysit while we take a vacation to Houston and go to the seminar” :mrgreen: Hey - whatever works!
Bumping from '99 to '03 to '05. Thanks for the list, TRandle!
I too, am a member of the “wives with hopeless husbands” clubs. I already have a successful business of my own, and would love for my husband do quit his ‘daytrading’ : and get into real estate investing. He’s a retired cabinet designer/builder, and was much in demand when he was in business, and has an extensive background in construction. So far I’m the only one who is going out and getting some education and making contacts. He wants to build vacation bungalows in upstate NY. We’re in Houston.
I’m determined to make this work, with or without him.
My husband is not at all interested so my Dad and I are working together. We are having a great time (except for tennent issues - see my topic). Husband resents doing anything for properties (including coming to closing). Idaho is a community property state so he either has to sign a quit claim or sign with me. Either way he has to come to closing. He said next time he is giving me a POA so he doesn’t have to go to closing. He sure doesn’t get what I find interesting about investing. I must admit today I am tired. I seem to be coming part handyman. I must find a second handyman that doesn’t drive a truck.
I would offer the bank $20k (i.e. 50%) for the property (free and clear) and then list it right away from $35k. Rent it while for sale for $650/mn. Probably could make $10k fast IF the market is reasonable. If these condo are slow movers then forget it and move on; let them(the bank) take it back. It will be a boat anchor for them.
and get into real estate investing. He’s a retired cabinet designer/builder, and was much in demand when he was in business, and has an extensive background in construction. So far I’m the only one who is going out and getting some education and making contacts. He wants to build vacation bungalows in upstate NY. We’re in Houston.