I’d like to start by saying I’m amazed with the warm welcome beginners tend to get here. It’s impressive actually, compared to what you find so many other places on the net.
I’ve got a few thoughts that I hoped you could weigh in on.
I am a true beginner looking to make my first deal, aside from my personal residence that is a slow going fixer upper (biggest mistake i made was getting comfortable and becoming blind to the work in progress around me).
My plan is buying SF homes or small multi’s that are underpriced and holding for cashflow (possibly slowly increasing value through occ upgrades between tenants).
To outline my situation
I live south of Tampa Bay
My residence was purchased in 2009 for 55k; a 1500sqft ranch built in 1972. at the pace im going it wont be ready for another year or two
I have around 30k to invest
when i search realtor.com for properties i find that there are noticably fewer properties available now than there where 6 mo ago and more than 80% are shortsales which im trying to avoid (this has me worried)
Ive bearly missed out on two fantastic deals im the last six months. This was excruciating.
So Im faced with a new deal, 89k for a 1500 sqft 4/2/2 built in 2001, nice subdivision. could rent for 1000-1200 (just reseached comps on craigslist). hopefully ready to rent, my showing is tomorrow.
I apologize for not really having a specific question. Im really looking for local advice, general feedback, someone-who’s-been-there, and new inspiration
and if someone knows why there appears to be nothing but shortsales out there, please elaborate. Is there really a boon of inventory coming like they say?
I live south of Tampa Bay
I like that area. Especially Sarasota
I have around 30k to invest
That is not a ton of money, but you still have some options. You can use that money to buy a house to rehab, and sell for a profit, and derive EARNED income from. Or you can use that money as a downpayment on a house or two, and buy & hold it/them over the long run, but you won’t make near as much of a return or get as much cashflow because it is a PASSIVE income investment. There are other options too…you can buy one or two really cheap homes, buy an assortment of mobile homes, or use that money to buy a small apartment complex.
There are noticably fewer properties available now…
I have found the MLS in Dallas is still “full of deals”, but each market is different. However I don’t buy from the MLS hardly ever - I have found the best deals can be found via direct mail ads
Im really looking for local advice, general feedback, someone-who’s-been-there, and new inspiration
Is there really a boon of inventory coming like they say?
Probably not. I think things will stay the same, or get better, when it comes to the housing market. I believe we have already hit bottom. Again, this is a very localized situation…in neighborhoods like in the Park Cities (Highland Park / University Park) in Dallas they hit bottom a year or two ago, but that’s also the most expensive and in demand area in the area to live. However where I am buying properties in Dallas, I keep getting better deals yet there is more demand to rent and own there than ever - and the tenants are becoming more desirable too (more educated w/ higher incomes).
jparinel,
Hi. Is that 89k price for the house the current retail price or is this considered a deal in your area? Why do short sales scare you? Someone borrowed too much on a house and now the bank just has to agree to a lower sale amount. It can be a long process to close the deal, but I wouldn’t necessarily steer clear of these if the prices are good.
Your rent vs. purchase price for this house is way different than the rentals I buy, but your potential deal is in a much nicer area than my rentals. With that purchase price, you will probably have to stretch out the payments over 30 yrs. I don’t think the payments for 15 yrs give you enough room after everything is said and done. At 5% interest, you’re looking at $711.71 for 15 yrs or $483.14 for 30 yrs. Even if you get $1200/mo, I don’t think $482 per month is enough. If the property tax is $150/mo and insurance is $75/mo, then there’s $257/mo left. Repairs, maintenance, vacancy, utilities during vacancy, etc will eat into the rest of it.
Check to see if your area has different access to the MLS besides Realtor.com. My area has virtually no listings on Realtor.com and I have to get access thru my local Realtor’s website. If you’re trying to find a good rental price for certain qualities of homes, get several quotes for rents. Check ads in the paper too.
Seller:I will finance the purchase with a traditional loan through a local bank. I am pre-approved for a 5.125% loan with 25% down.
Justin: i shouldn’t say that i am scared of short sales. I just wouldn’t like to be tied up and waiting for an answer, potentially watching other deals pass me by. I’d like to know where the deal stands so I can move on If necessary. Also this appears to be one of the best deals in my area. Only a few comps have gone for this price/sqft in 2011 with others in the 70’s and 80’s. Cosmetically the house attention so that may explain the difference. Finally, you mention getting several quotes for rents; you mean follow leads on several advertised comps? There aren’t many available in my area, what do you think of the estimate on zillow or a realtors recommendations
motivatedceo: It’s not hard to like Sarasota, Siesta Key is continually voted the #1 beach in the states. On-topic; Im young, work full time and am inexperienced with all aspects of rehab. I am pretty handy myself and so have never had to hire out a job. Passive income with gradual improvements appears to be the correct path, at least until i can quit my day job. My wife and i are big savers and will reinvest all cashflow so i expect to have another down payment saved before the end of 2012. I dont mean to disagree with your advice, i appreciate hearing. I just think that i would be more comfortable with a more conservative approach
Go for short sales. About the waiting for an answer concern. Just put an expiration date on your offer. My realtor advises his buyers to put two days untill the offer expires, that way they buyer has an out.
I low-balled a short sale one time and got an accepted offer a month later. (I had the option to say no, without being out earnest money, since it took so long)
My most recent purchase was a foreclosure. Offer was accepted in less than 2 hours.
Banks normally take a while, but not always.
Yeah, I’d check into what people are asking for rent for different properties in your area. Going into our current market, our Realtor helped us determine what we could get. With experience, we figured out what we could get for different properties based on size, # of bedrooms, etc.
I’m a big fan of pouring money back into the business so I like that you’ll reinvest the cashflow to grow bigger!