HELLO I JUST PURCHASED A FEW PROPERTIES IN OHIO AROUND $15,000.00 EACH THROUGH AN AUCTION SITE. THESE PROPERTIES ARE OUT OF STATE FROM ME AND ARE SOLD ON A “AS IS” BASIS. I REALIZED FROM THE BEGINNING THAT I COULD OBTAIN FAST LOANS AND RETRIEVE MY CAPITAL FOR THESE HOMES. EACH LOAN I OBTAINED WAS APPROXIMATELY $40,000 AND HAVING AN EXTRA $25,000. THE PROBLEM IS A COUPLE OF PROPERTIES NEED SOME REHAB AROUND $5,000 TO $10,000 AND THE MARKET VALUES ARE ACTUALLY LOWER THAN THE LOAN AMOUNTS, EVEN THOUGH THESE HOMES AFTER THEY ARE FIXED I CAN RENT OUT OUT AND THEY WILL PAY FOR THEMSELVES. I HAVE JUST STARTED REAL ESTATE INVESTING, I WAS NOT ABLE TO SEE THESE PROPERTIES OTHER THAN A FEW OKAY PICS ONLINE BECAUSE OF THE DISTANCE FROM ME IN CALIFORNIA, ANY SUGGESTIONS ??? ??? ??? ???
Suggestions?
Yeah, don’t do that!
Sounds like the old “Doctor, it hurts when I do this…” joke.
Seriously, I’m not sure I see a huge problem. You don’t say how many you bought (other than "a few) – for the sake of arguement, let’s say it’s five.
You paid $75K for the lot of them (5 X $15K) and you borrowed $200K (5 X $40)…somewhere lying around, you should have a stack of about 125 $100 bills ($200K - $75K = $125K)…the average of these houses needs $8K in work (just for arguement)…that’s $40K (you still have $85K in working capital)…
On the average, each house would have a mortgage of about $293 (using 8% mortgage rate for 30 years)…add taxes, insurance, maintenance, managemet, and vacancy → you need to get about $475 a month rent to break even. If you fix up and hold, you should still be OK until the units appreciate to the $45K that you need to sell at to break even…it might be tight but, probably do-able. Meanwhile, you do have some tax advantages and $85K of tax-free cash to work other deals!
Your description leaves a lot of holes…so, I best guessed.
Hope this helps,
Keith
somewhere lying around, you should have a stack of about 125 $100 bills ($200K - $75K = $125K)…
Fuzzy math 
Oops, you’re right…I left off a ‘zero’…there should be a stack of 1,250 $100 bills somewhere!
Thanx,
Keith
First suggestion:turn off the caps key.
Second suggestion:don’t buy properties sight unseen and with no due diligence off of an auction site.Not at least seeing the property and investigating the neighborhood is like hoping a blind date turns out to be Miss Universe.
Thank you for your reply; I appreicate the advice. Do you know much about the market in Ohio? Local realtors to the area claim that they are experiencing a declining real estate market; do you anticipate that the values will go up? Another words, should I get out of the area now or is it safe to continue buying there? ???
You will not see much if any appreciation in Ohio. The best homes are seeing very minimal (1-3%) appreciation from what I researched.
Also, never buy something without seeing it. What if the land had environmental issues on it that would cost $1,000,000 to clean up. Guess who must foot the bill? Rhymes with U.
Not to mention all the other problems. Vacancy rates in Ohio IE Dayton, Columbus, Cinn, et al are on the rise. Rents in the areas with those cheap homes/duplexes will probably be in the $150-$250 per month range.
So buy on cash flow only because appreciation is a figment of your imagination in Ohio.