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question for realestate experts - 5/31/2008 9:33:00 AM
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Pamsy
Posts: 195
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I am just begginning to dabble in real estate investing and am looking at a house to possibley buy in order to rent it out. It was used for renting, but the owner had to kick the last tenants out and it has been sitting empty since january on the market. It mostly just needs cosmetic work. I looked up who owns it and then found he has of 2005, a 55,000 mortgage on it, (all public records, of course) and it is selling for 79,000, in which theyjust lowered the price, so I know he must be motivated. I havent tried to contact him yet. I am looking for suggestions in how I could make a deal without having to put money down on it. I know there are a variety of options.
_____________________________
1 Chorinthians 13 vs. 4-8. Love is patient, love is kind.......Love never fails."
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RE: question for realestate experts - 5/31/2008 10:57:01 AM
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peace77
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If you don't have the funds for a down payment, then don't buy rental property.
You will need funds for remodeling, paying for the home until you have a tenant, and paying for repairs/maintenance until you have a reserve fund built up.
Don't believe what you hear in infomercials.
The lending market has changed in recent months. Banks are not offering 0% down loans anymore.
Most banks want at least 10% down now. Be aware that you will be paying higher interest for a non-owner occupied property.
For more on this subject see Investing in Real Estate
Peace,
Anne (former landlord)
< Message edited by peace77 -- 5/31/2008 11:21:16 AM >
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RE: question for realestate experts - 5/31/2008 11:07:28 AM
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Miss Giggles
Posts: 4280
Joined: 4/18/2005
From: MI
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Yes there is a "credit crunch" and loans are not as easy to get anymore.
Foreclosure properties are usually in need of more work, the money was not there for repairs and maintenance.
Landlording is not for everyone, and in most areas you won't be able to get the rent to cover the mortage + a profit.
The only good thing about a down market is that you can get a home when ready at a lower price and maybe over the long term it will appreciate in value.
< Message edited by Miss Giggles -- 5/31/2008 11:14:00 AM >
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RE: question for realestate experts - 5/31/2008 1:22:15 PM
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APZR
Posts: 910
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From: GA
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I use a local bank, and get a one year interest only loan until it's remodeled and in decent shape. However, more and more banks are requiring 20% down no matter what the sales price. In the past I could by a $100,000 house that needs $8,000 to $10,000 in work for $65,000 and not have to put anything down. Now my regular source wants $13,000 down event hough I've got a great equity position. So I've had to change banks this past week, and found an investment bank who understands what I do as a builder/investor/developer.
BTW, with a short term note you don't pay taxes on the loan as you do with a long term note. I pay 1% origination, no closing cost or points, and have the option of rolling over the note after one year. The object is to just get the property in my name, get it fixed, and get it occupied so that I can get a more conventional loan if I want to hold it long term.
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Ya can't keep trouble from visitin, but you don't have to offer it a chair.
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RE: question for realestate experts - 6/1/2008 9:47:18 AM
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relady
Posts: 1277
Joined: 4/11/2005
From: Greater St. Louis Metro
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quote:
The lending market has changed in recent months. Banks are not offering 0% down loans anymore. It has always been a little more difficult to get 0% down financing if the lender KNOWS it's not going to be owner occupied, but in the last couple of years or so even those rules were bent & broken. Now, I doubt you would be able to find a lender to give you a non-owner occupied loan without 20% down UNLESS you have a track record with them or have been in the investing business for a while.
I agree with Peace....don't listen to the "gurus" on TV. They don't know what they are talking about most of the time in most markets, lol. All they really do is make my job ( realtor ) more difficult. 
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RE: question for realestate experts - 6/1/2008 4:13:05 PM
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Pamsy
Posts: 195
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I know, I had a good savings account started, but I had to spend it to save my husband. Anyway, it is risky, i know to do something with out a cushion, tho I hate to tell ya, I really do believe some of those things are possible, it just takes the right person/situation to make it work, along with crediblility and the ability to sell yourself. Probably tho if you already have something established you are seen as less risk.
_____________________________
1 Chorinthians 13 vs. 4-8. Love is patient, love is kind.......Love never fails."
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RE: question for realestate experts - 6/2/2008 12:30:49 AM
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crm4souls
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Will the property cashflow with a renter in it? Can you get a fixed loan on it? These are important questions, because the market will go lower. The deals will get better over the next year. Patience will bring even better deals.
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RE: question for realestate experts - 6/2/2008 8:03:40 AM
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P31W
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quote:
It was used for renting, but the owner had to kick the last tenants out and it has been sitting empty since january on the market.
Why do you believe this is a good investment?
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RE: question for realestate experts - 6/2/2008 9:47:23 AM
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peace77
Posts: 719
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quote:
I know, I had a good savings account started, but I had to spend it to save my husband.
Then, WAIT until you have an emergency fund (savings account) before you consider investing in real estate or anything else.
Peace,
Anne
_____________________________
I GoodSearch for Deaf Missions.
Raise money for your favorite charity or school just by searching the Internet or shopping online with GoodSearch - www.goodsearch.com
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RE: question for realestate experts - 6/2/2008 10:06:23 AM
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NoShow
Posts: 462
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quote:
ORIGINAL: APZR
BTW, with a short term note you don't pay taxes on the loan as you do with a long term note.
What kind of taxes are you referring too?
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RE: question for realestate experts - 6/2/2008 11:11:31 AM
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APZR
Posts: 910
Joined: 4/18/2005
From: GA
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quote:
ORIGINAL: crm4souls
Will the property cashflow with a renter in it? Can you get a fixed loan on it? These are important questions, because the market will go lower. The deals will get better over the next year. Patience will bring even better deals.
Not where I am. The market has already picked up, prices are rising, rents are rising, and my houses have been in high demand.
quote:
What kind of taxes are you referring too?
Intangible Taxes. In GA, you pay a tax on $$$ borrowed if the term is longer than 1 year.
_____________________________
Ya can't keep trouble from visitin, but you don't have to offer it a chair.
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RE: question for realestate experts - 6/4/2008 2:02:34 AM
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relady
Posts: 1277
Joined: 4/11/2005
From: Greater St. Louis Metro
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quote:
Not where I am. The market has already picked up, prices are rising, rents are rising, and my houses have been in high demand. Same here. I can' t tell you how many buyers are losing homes because they don't want to make a fair offer. They all think we're California where they should just automatically take $40K off the price regardless. Around here, if homes in a neighborhood are selling for $150,000 a buyer ain't gonna get one for $120,000 unless it's trashed.
Plus, interest rates aren't gonna go any lower either. All my lenders tell me they are only gonna go up from where they are now. So all my buyers who think 7% is too high....well, they may miss the best deal. Unfortunately for them.
< Message edited by relady -- 6/4/2008 2:09:22 AM >
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RE: question for realestate experts - 6/12/2008 5:01:46 PM
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U376977
Posts: 49
Joined: 2/24/2008
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quote:
ORIGINAL: relady
quote:
Not where I am. The market has already picked up, prices are rising, rents are rising, and my houses have been in high demand. Same here. I can' t tell you how many buyers are losing homes because they don't want to make a fair offer. They all think we're California where they should just automatically take $40K off the price regardless. Around here, if homes in a neighborhood are selling for $150,000 a buyer ain't gonna get one for $120,000 unless it's trashed.
Plus, interest rates aren't gonna go any lower either. All my lenders tell me they are only gonna go up from where they are now. So all my buyers who think 7% is too high....well, they may miss the best deal. Unfortunately for them.
Housing is turning around in most areas of the country. Yahoooo! NOO (non owner occ) is still a risky deal to investors. Fannie/Freddie allows for 90% LTV--meaning 10% down from the borrowers own funds. And as of June 1 their rules have changed. You can only have 4 mortgage properties and qualify for an agency loan. That would include your primary, and 2nd home.
More than 4 mortgages means you will have to get a non agency loan at a local bank or a portfolio loan with an investor. Almost impossible, since they have no place to sell the loan and will have to carry on their books. The Mortgage backed securites market is all but dried up and will be years in returning.
If you are looking at being a investor in rentals--good luck.
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RE: question for realestate experts - 6/13/2008 3:41:45 PM
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ChristianAttorney35
Posts: 7
Joined: 2/21/2008
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Homes for $70K? $100K?
Aren't we missing a few zeros here?
Sorry, but I keep forgetting how crazy things are here in the Bay Area.
To respond to the original post: Investing in real estate can be a great idea, if you truly know what you are doing.
My recommendation, hire a CPA or book-keeper who can help you crunch ALL the numbers (i.e. not just mortgage payment but upkeep, repairs, etc.)
If they can help you, try to see what your rate of return will be on your investment (both cash flow and/or appreciation in value).
If it is in the 5-6% range, you might want to consider consulting a financial advisor about investing in the stock market. It's a LOT less glamorous than saying "I invest in real estate", but it often gets the job done much easier.
It requires a LOT less time and energy, and you don't have potential liability if a tenant or guest is injured due to some oversight on your part.
Rule # 1 in all Investing (from Warren Buffett), don't invest in what you aren't familiar with.
I see this most often with my clients here in California, who try to invest in real estate markets in other cities/states that they know nothing about.
Happy hunting!
_____________________________
"Teacher, tell my brother to divide the inheritance with me."
Jesus replied: "Watch out! Be on your guard against all kinds of greed; a man's life does not consist in the abundance of his possessions." ~ Luke 12:13-15
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