Best Low-Investment Rental Property City Of 2004 / 2005!
Firstly I would like to say that it has been very enlightening for me to read the forums here at TCI. My heart goes to those of you that has been generous enough to share your expertise, knowledge, and experience with all of us. I hope we can continue to be enlightened...
Anywho, I am a beginner in REI, my primary motive was to look for cashflow properties, however my budget is limited. I am looking for properties under $70K, I will be able to rent it out, generate positive cashflow from the property, and with modest ROI / cash-on-cash return.
From where I come from, San Francisco, it is impossible for me to do this, not to mention the skyrocketing prices, but also the high imbalances between the value of the property and the rental income. Thus, I am looking across the country for the best investment, no matter the distance.
Although, I regard price appreciation, but I hold cashflow to be more of importance.
So please again enlighten all of us and post the location that you think is for suitable for the kind of investment property I was talking about.
(low-investment, lower vacancy rate, higher ROI, growth, and etc..)
Please also give us a brief comment why you think it is a good location. Thanks and God Bless.
:-D
Well I think you're seeking eutopia and it doesn't exist. And while everyone here is willing to share knowledge, I doubt anyone is willing to share thier "fatted calf". If you don't plan on moving, I suggest taking an extra day or two anytime you travel and check out the conditions in that area, especially if you have family or friends there who could periodially drive by your investments and make sure everything looks OK from the street. Good Luck!
You're rarely going to find everything you want in a given market. Granted, you can find a decent market, and then find a great property.
If I were you I'd look in the south and in the midwest. You won't see the appreciation there that you're used to, but you can easily find cash flow positive properties that don't cost too much to get into.
You are asking a lot ruizhen18! Almost anyone will share there knowledge and even some experience but, you are asking to drink from their milk jug.
Besides, every area is different. The absolute best way to find an area that meets your needs is to get in your car and look around. You may have to cross state lines to meet your needs, but hey!
In my area, if I am just looking to buy and hold and rent, i can get into my props for 35-40K and that is rehabbed. a thre br sfr rents out for 650 a month cashflow after taxes woulkd be in the 171-250 range depending on taxes
[addsig]
I know what you mean. My area has seen a recent jump in prices that make it near impossible to buy a rental and have a positive cash flow. the 1 percent rule is out the window with these prices. so heres what I did. I started looking around and found out in my old college town in VA they had crazy low prices on homes. example..I just closed on 2 sfr and paid 60k for both! now, they are not in the greatest area, but one is already rented to a older lady that is a long term tennant and the other one we have already shown to a person that is very intrested in doing a LO or rent to own. even with the very low rents for that area after all is said and done and its managed by a professional mgmt comany I will positive cash flow 300 dollars a month, plus one of the homes came with a small vacant lot that habbitat for humanity is buying from us for 5k. and because the market is not as competative we got the deal 0 down and actually put 900 dollars in our pocket after. my only suggestion would be to get a partner if you are going to be far away. I got a good friend of mine from college who still lives there, he has been worth his weight in gold. I plan to keep buying in that town, there are deals galore.
Jacksonville Florida
This message is to szukac and whbrown3.
I dont believe I am asking too much, and I really do believe such a property definitely exist.
Although such a property will not be in a too good neighborhood. As I mentioned I am not looking for an appreciation too much, even it was a bad neighborhood, as long it has a lot of rental demands and lower investments to get into.
And I do not understand why you are so afraid in posting an area that you find good investments in.
Can you swallow and digest the whole area by yourself? I doubt it!
I also truly believe if you are a pro in REI and have succeeded, you will be sharing your success stories, only amateurs do not have one. No offense.[ Edited by ruizhen18 on Date 11/28/2004 ]
Don't focus too much on parts of the country. I think your thinking too urban. I was in your boat about 3 years ago, so I know your feeling. I'm from Chicago and could find nothing in my price range except in bad neighborhoods. I found great success moving a little further out of urban areas. I don't know San Fran, but I would say go past the edges of suburbia, or to it's fringes. You should be able to find better ROI with reasonable appreciation. I would look at that option before investing in parts of the country you don't know well. Good Luck!! 8-)
Dallas, TX has seen next to no appreciation in the last few years while other major cities have been skyrocketing.
Where else can you buy a brand new 2000sq. 4/2.5/2 in a planned community with golf courses and a water park for under $130K?
I don't even consider buying a property as a rental here unless the capitalization rate is above 12%. It's easy to find places with 14-15% or higher.
All my rentals have positive cash flow. Just not much equity.
Thanks for all the input and advises guys. I really appreciate it. I will do more diligence and research myself before investing into a market, that you do not have to worry.
Since I am a beginner in this, I am virtually blind of the RE markets out of the Bay Area. I have scanned pretty much the markets within the span of 100 miles in my area, and none has ever gone below $100K, it really is very disheartening.
However, if you guys have any markets that you may think is suitable, please post it into this forum or you may PM me. Thanks for all the help.
I'm right there with you on that one. I'm In Union City (1/2 way between Oakland and San Jose for you none Bay Area folks) and have been looking at property in my home state, Michigan. Brianma makes a good suggestion to look further out of town but that doesn't work in the Bay Area. Except for the worst parts of Oakland you can't find anything for under $400000 and most places you can't find anything for less than $ 500,000. Even when you start getting an hour or 2 drive from the Bay everything is above $300000. You have to get 3-4 hours out to find rentable properties that can break even. Even than I'm not sure of the viability of rentals in itty bitty Sierra mountain towns or Nor Cal. Mind you, I've no experience as a landlord yet so all my conjecture maybe way off base.
What you guys are saying about Northern CA is true. Rentals simply don't pencil well there - unless you're betting heavily on short term appreciation. I moved from Sacramento about a year ago to Southern Indiana. I have a duplex that I'm rehabbing presently, also a SFR. I'd say that my area is reasonably good. The only caveat is that it's Podunk, Indiana, so the laws are wierd, and you really need to be out here to do deals. It may be possible to do out of state landlording, but I certainly wouldn't advise it.
Over all advice regarding NorCal, and the high prices - go Midwest, young man... (South may work as well).
Been there, done that...
-Jeff
LOL, I ran away from the midwest 7 years ago to escape the weather
It's a mixed blessing, if the real estate "Bubble" has a correction I'm short term screwed as I own very little of a very $$$ Bay Area house but if things keep moving here I expect to double my money in 6-8 years. I just feel too overexposed to this particular market to want to risk all my cash to it. Long distance landlording has to be more troublesome than local but I do have many friends in the Detroit Metro area. I'm planning to pitch some sort of partnership to a couple I trust the most. I'm hoping that will mitigate some of the potential problems. --I'm just trying to be creative!
loanwizard - you're right on target! I'm surprised myself. A lot of people offer great advice, but all the partnering is probably going on behind the scenes or in PMs, because I've yet to see a "bird-dog" post (seeking one or being one) get a single cooperative reply. I am from Midwest (Louisville), and I just put a Chicago partner on a plane this morning after closing on two deals yesterday. It's definitely not too hard to find 12-15% caps here if someone takes care of management. And I would happily oblige to find a deal and manage it, if anyone needs to create C/F out of a larger city with less lucrative investments. Commercial and large appartment buildings are available for sub $50k/unit, and 1,2,3,4 unit residentials are $30k-120k with rents in $350-850 per unit.
I agree with you loanwiz.
I have wondered the same thing.
Seems like there could be some significant win/win situations.
So, here is my low investment winner bet that I have never seen mentioned on this site: Wilmington, DE. or
Norfolk, Va. :-?
Can you provide an email contact if your serious about partnership?
Thanks
Tim-
Hi Louinvestor,
please correct me if I'm wrong, if you are in Louisville, KY, then you are supposed to be in the South not the Midwest?
Quote:
On 2004-11-30 12:36, LouInvestor wrote:
loanwizard - you're right on target! I'm surprised myself. A lot of people offer great advice, but all the partnering is probably going on behind the scenes or in PMs, because I've yet to see a "bird-dog" post (seeking one or being one) get a single cooperative reply. I am from Midwest (Louisville), and I just put a Chicago partner on a plane this morning after closing on two deals yesterday. It's definitely not too hard to find 12-15% caps here if someone takes care of management. And I would happily oblige to find a deal and manage it, if anyone needs to create C/F out of a larger city with less lucrative investments. Commercial and large appartment buildings are available for sub $50k/unit, and 1,2,3,4 unit residentials are $30k-120k with rents in $350-850 per unit.
Hey, money partners are welcome here in south MS. I have been investing for exactly one year. My first purchase was 2 sfh for 38,000. After rehab, I recieve total rent of 900 a month. Second purhace was a run down sfh and duplex together for less than 20,000. When I'm finished total rent will be 725 / mth. My current purchase is 2 sfh for 40,000. total rent is 720/mth. All total over a 1,000 positive cash flow. The deals are out there, but it takes work to find them. So far, I've not used any of my own money. I'm trying to keep it that way. :-D
Quote:
On 2004-11-27 05:46, ruizhen18 wrote:
Firstly I would like to say that it has been very enlightening for me to read the forums here at TCI. My heart goes to those of you that has been generous enough to share your expertise, knowledge, and experience with all of us. I hope we can continue to be enlightened...
Anywho, I am a beginner in REI, my primary motive was to look for cashflow properties, however my budget is limited. I am looking for properties under $70K, I will be able to rent it out, generate positive cashflow from the property, and with modest ROI / cash-on-cash return.
From where I come from, San Francisco, it is impossible for me to do this, not to mention the skyrocketing prices, but also the high imbalances between the value of the property and the rental income. Thus, I am looking across the country for the best investment, no matter the distance.
Although, I regard price appreciation, but I hold cashflow to be more of importance.
So please again enlighten all of us and post the location that you think is for suitable for the kind of investment property I was talking about.
(low-investment, lower vacancy rate, higher ROI, growth, and etc..)
Please also give us a brief comment why you think it is a good location. Thanks and God Bless.
:-D
Hi ruizhen18 !
Had just what you were looking for! $65,000 SFR, $450 month rent, good area. The only thing is I sold it in 1983!
Seriously, you are not being very realistic in today's market. You cannot turn back the hands of time! ( If you can, let me know and I will become a Believer!)
Also, what is the significance of $70,000? Is there some magic to that number? Please enlighten.
If you want to come to New York, we can hook you up with the equivalent of yesterday's deals in Albany, New York. Albany is the capital of NY State, about 150 miles north of the City.
We will be offering 2 and 3 family investment properties with positive cash flow in the $140-$200K range with 10% down in the near future. Gee, I guess that does equate to $70k per unit after all!
Albany had been asleep for many years with paltry 2-3% annual appreciation. But now, the prices have started to shoot up (30% in the last 18 months!) and it will probably not be possible to get positive cash flow deals at these prices much longer.
What happened was that the Governor lured a new, Billion dollar Integrated Microchip consortium to the University of Albany in 2002, SeMaTech. It is drawing hi-tech companies to the area like a magnet!
IBM has invested over $100 Million and is relocating people to Albany. Tokyo Electron is coming in with about $300 Million and has established their first lab outside of Japan in Albany. Sony is doing a joint venture in East Fishkill with IBM on the next generation, "Cell" chip that will run all new computers and electronic gadgets starting in 2006. East Fiskill is about an hour south of Albany.
This is just the start, but they already have a name for New York State's hot new hi-tech area, the answer to Boston's Rt 128 Corridor and CA's Sillicone Valley, Tech Valley!
All of this money and people coming in have finally got the prices moving. An example, 4 years ago, we were able to buy rehabs $4-$12K, but no more. In fact, one we bought in 2001 and sat on, did nothing with, just sold for $38,000, needing a complete rehab!
The properties we will offer are mostly renovated and feature rents of $19-$30,000 per year and will throw off a nice cash flow with as little as 10% down. We have mortgage companies that will give unlimited numbers of 90% investor loans and management companies that will provide services for out of the area investors.
Keep and eye out on this site as we will probably begin posting deals as early as next week!
Good luck, ruizhen18!
Bill
:-D
Yep... Louisville _is_ in the South... but I live 35 minutes north of there, and I'm in the Midwest. Go figure. All has to do with crossing the Ohio river... Once you pass over the muddy river with the 3-eyed catfish, you're on the other side of the line... (grin) strange, but true. Amazing what artificial lines can do to people...
That doesn't mean that he's wrong on the rest of the post... in fact he's spot on. All of us out here in low rentville should be partnering up all over the place. No lack for opportunities out here. And no, I'm not worried about an influx of investors... That'll just raise the value of what I already own. It's a win/win... If you want info on my area, I'm _always_ willing to talk.
-Jeff
Hey ruizhen18 !
If you are getting into REI you are smarter than most
and not as dumb as many . Good for you !
I started about 3 years ago in South CA , and now have
11 units cross country . approx. NOI of $40K from all .
1. all the data you seek in on the WWW. you just have to get it..
1. Look for Areas with Low Prop Tax- Prop tax is like
Assoc Dues they steal from your NOI , Never go away
and excellerate . Here is a huge tip/riddle for you ..
But you must unscramble it (help) it is all the cities
states with very low prop taxes and great deals..
OKLAHOMANEWMEXICOALABAMAUTAH
Once you get all of them seperated .. Start Looking
at diff. cities in those states for deals..
I just picked up 2 props in one of these States @ 6X gross .
Good Luck to ya! .. Also another tip for ya.
Keep your FICO high as the sky and shop well
for finance deals to help max out your NOI .
I live in CA and own a property in IN. If you look around you can likely find someone to manage an out of state property for you. I used the contractor who did the rehab on my property. If you pick up an SFR or duplex, the management is usually not overwhelming (there are exceptions!).
If you are looking to buy and hold, you should work on solving out of state management problems.
8-) I am in Chicago and with the prices rising here 25-45% even in the inner city we have been forced to look at areas in southern Illinois, Wisconsin , and Indiana, all within 200 miles of Chicago......Look at www.Realtor.com and you can see properties in 95% of the country that are listed with a realtor. Small cities in the midwest and southeast are good places to buy properties at less than 70,000, and get positive cash flows of 200-500 per month, multiple units properties have more net cash flow. If your credit is good try to obtain an interest only loan as it will reduce your monthly mortgage payment by 35% or more. Also try to get a local propert management company that can obtain Section -8 tenants for you... Section -8 tenants can increase your montly rents by 25-30% above cash rent tenants...good luck
You should check the discussion going on at "Owning 20 SFR And Dealing With Negative Cash Flow" in CA. If you go south of SF, the picture is not that different. In Riverside, rents are also way behind the PITI. I also agree that going outside CA will require lots of work and worries. Let me know where you'll be going, I might follow
. Good Luck!
When I started to analize the Risk of Out of State
REI and talking to Property Managers around
the USA I noticed a few things..
1. Find the Best Prop Managers in the Areas
Ask 4 or 5 RE Agents in the area for Refs.
2. There are a lot of Big Investors doing it .
I talked to one agent in New Mexico who has
a list of investors who buy sight unseen .
He E-Mails them the Numbers on a new MLS
and if they show above an 25% Return
(they know they cannot get from the Stock Market
without huge risk) they buy and he manages .
These are investors form , C NY , PAA , AZ , WA ect..
To them it is the conservative portion of thier Portfolios
Darryl
Ruiz,
I am a little preturbed when someone says you can't buy 70,000 houses in 2004. Only 1983. LOL I'll give you 4 examples:
1.Purchase price 28,000 rehab 11,000 Refinanced for 61,000 took 11,000 out at close. Final appraisal was 78,000. Rented at $725 a month with a + cash flow of $210.00.
2. Purchase price 28,000, No rehab. Appraise at 39,000. Rented at $400.00 a month. + cash flow of 180.00 a month.
3. Purchase price 72,000. No work. Appraise at $86,000. Rented at $840.00 + cash flow of $110.00 a month
4. Purchase price $63,000. No work. Appriased at $74,000 Rented at $775.00 a month + Cash flow of $190.00 a month.
All of these deals was no money at of pocket and one I received $8800.00 back at close.
8ball007 ,
Looks like great deals to me .. even with the high Prop Tax in GA you are making it work with excellent purchases .
Can I get some help from you ?
1. How do you buy these with zero out of pocket ?
No Down Payment ?
I do not know if any bank that will loan for income props with zero down
2. How do you get around bank charges and closing costs of $3K to $4 per Property ?
Your help would be appreciated greatly
Darryl
Quote:
On 2004-12-06 21:30, RetireEarlyLBCA wrote:
8ball007 ,
Looks like great deals to me .. even with the high Prop Tax in GA you are making it work with excellent purchases .
Can I get some help from you ?
1. How do you buy these with zero out of pocket ?
No Down Payment ?
I do not know if any bank that will loan for income props with zero down
2. How do you get around bank charges and closing costs of $3K to $4 per Property ?
Your help would be appreciated greatly
Darryl
Buy them here in South Bend, IN. My seller is paying all closing costs and fees and returning roughly 10 months rent which I'll use as my 10% down. I'll get some positive CF with no investment of my own.
Roger
Hey Quest ,
Thank s for the tip , I have looked at South Bend
and have passed- because of a few reasons
1. Mainly older Multi's Like 1900 ect .. not attractive
to me 2000 miles away .
2. Fairly High Prop Taxes
3. Population is Dropping / not Rising (per Census)
but not as bad as some places I have seen .
But , If I lived there I would forego most of these
becasue the numbers do work real well even with the
high Prop Taxes .
For all looking - here is an analysis I just did on a dupe
for sale there now on RE .com
1043 LINDSEY -DUPLEX
SOUTH BEND, IN 46616
MLS ID#: 196385 - Asking $34,900 ( X 4.1 Gross) Very good !!!
Built 1953 ( one of the only few newer places listed)
(2) 1br 1ba s Rent for $350 ea. total $700 GRI
Conservative approach
$30,000 Purchase
Less 20% = $24,000 Loan
7% PI = $150
Tax = $158 (high)
Haz = $40
PITI = $348 mo
Man fee= $56 mo ( if you are long distance)
Total Output = $404 mo
G- Inc $700
= $296 mo NOI (not inc Vac & Maint)
If you buy it cash your NOI would be $446 mo
That would be approx. 18% Return Cash - on Cash
befor Maint & Vacancy - Not bad .. but not excellent .
Not bad , Not bad at all !
If you live near South Bend I would jump on it .
I will call a few Prop Managers in the Area to get
a better analysis of the area / market as a whole .
and get an agent to start sending me only
Newer Built Listings 4-plex & up .
Thanks Quest !!!
Darryl
Good point about the trust issue. That is a given, especially in this business. We have a similar situation as San Francisco (but perhaps the S.F. of 10 years ago). In Orlando, we have serious price appreciation and overly priced properties in the areas close to Downtown. However, in the outer areas, there are still bargains. Prices in the 70's - 90's are not uncommon and rents are stable. These are poorer areas but will eventually be folded into the same mix as other higher end properties (perhaps 5 - 10 years down the road). Good long term investments with adequate cash flow in the meantime.
[addsig]
quick question, when buying rentals, is it better if we get a title insurance, will the seller provide it for us or do we have to pay it ourselves?
And what is a warranty deed? I think I saw many types of deeds out there, can somebody list all the types of deeds out there and explain their usage. Thanks.
To alcmaeon,
My wife and I are in the same predicament here in Vacaville (sorta between SF and Sacramento). We are renting out our SFR for $1900 and monthly payment is $2045. We're counting the neg flow as an investment towards equity. It's already appreciated 90K since 02 and things are still looking up in this area. We live by Travis AFB and they just posted they are losing 1,650 homes in the next 3 years so hopefully the rent will catch up as well. We'll see. Good luck in your search.
If you look at making a living on rentals Good LUCK. I am surprised no one has said your not going to, The place you make your money is the appreciaton 2-3 percent a year avg. Figure a 200-300 a month is a good income from a $100,000 SFR, in most cases very good , then you only make 2-3,000 a year. It would take you 10 properties to make 20-30 K a year Then figure 1-3 months vacancy a year You may break even after all that. Then when you get tenants that tear the place up then you loose that as well. So before you jump right in make sure you have a plan on what you'll do when you have a vacancy and no tenants how you'll pay for it. Again Good Luck
the whole idea of buying rentals for the long term is too make money off the rents. if there's appreciation thats well and good but for the majority, cashflow is king.
anyone who says otherwise should provide proof.
i have a house in CA that i bought this february. its gone up from 165k to 230k since then but i still get $300 positive CF everymonth.
on the flip side i did buy a condo in san diego for appreciation even though it had -100 CF per month but i sold it recently after it went up 85k in 12 months.
Many people have posted about partnering with people out of state to invest with.
What sort of equity/cash flow split are you giving the out of state partner? How do you work the financing etc.
-Jonathan
Paulpass ,
Sorry man , there are many , many folks making big
dollars out there on buy and hold cash flow , the only reason they have sold any properties was to buy larger buy and holds .
If you have an Apartment Owners Assoc where you live
go there and talk to some folks , it will open your eyes .
We have one member here in Long Beach that started
30 years ago with one 12 plex - he now owns 800
units , 25 on-site managers and a full-time prop man
office only for his investments - I cant even imagine
his monthly paycheck... HUGE considering he is collecting approx $400,000 per mo in rents if you
use an average of $500 per mo. ($500 per month is a rat -hole in Long Beach , CA).
This guy built a $400K per mo Gross Income Business
from a single 12-plex +++ he has 30 years of Equity.
Now , lets look at approx equity if you use $50,000
per unit = $40,000,000. If he liquidated .
Not bad for buying , holding , leveraging , buying more
using cash-flow to buy more ect.. ect ..
Another quick example -
Why would investors buy a 120 plex in places like
New Mexico where they have only seen appreciations
of about 3% to 5% per year in the last 25 years ?
Because the Cash-Flow is giving them a 15% to 25%
Return on thier Cash Investment .
The same goes for the small investor buying a duplex .
This message is to Shawn in Ohio. In what city can you purchase homes for $25,000 and up? Do they require rehab? If they are so easy to purchase, why can't a prospetive tennant purchase his own home at this low price and avoid having to be a tennant? You indicate that you have cash flow from your properties. Since it is a rural area, isn't it hard to find prospective tennants?
[addsig]
Quote:
On 2004-12-14 20:25, Don777 wrote:
This message is to Shawn in Ohio. In what city can you purchase homes for $25,000 and up? Do they require rehab? If they are so easy to purchase, why can't a prospetive tennant purchase his own home at this low price and avoid having to be a tennant? You indicate that you have cash flow from your properties. Since it is a rural area, isn't it hard to find prospective tennants?
Don,
Just about ANYWHERE in Midwest. I passed on one for $20k because it needed too much work, but prices like that (especially at an auction) are not uncommon here. The reason why they won't buy them is because their incomes and lifestyles are comparable to the prices of the houses. And most of these rentals are usually intended for people who do NOT want to buy (like me, I buy to rent out, but rent to live - cheaper that way) or are here for a job, or their credit score is 420 or something and banks laugh at them, or they live paycheck to paycheck, even though they make 500-600/week. Since most of Midwest is not vacationers or retirees, but industrial areas and your everyday hard working folk, it's not hard to find tenants if your rates are reasonable and you're a good landlord (Southern hospitality and good 'ole integrity goes a long way here).
Dont bother looking anywhere in california, cause you wont find anything that doesnt bleed red unless you have 100% downpayment. I live in Sacramento, one of the cheapest spots left in Cali, and the prices are outrageous. As an example, a 4-plex will cost you $600k with rents in each unit at $800 to $850. Once you take out the expenses, cap rate comes in around 3.7%. With only a 20% down, you'll be in the red for the next 15 years.
The guy who thinks he can double his price from here in the bay area is smokin' some of that recently legalized marijuana. I can't predict the peak any better than the next guy, but I can already start to feel the hot air emanating from the bubble. Maybe I'm wrong, maybe I'm the guy who said the Nasdaq is a bubble in 1999 at 2000 (when we know it peaked in 2000 at 5000), but I know that people are stretching so much as it is to afford a home here in sac. I make $74k here in sac and know that I couldnt touch a median home here (at $330) unless I wanted to forgo my family, car, eating, clothing, etc. How is the poor, average guy making $50k ever going to afford anything? First time buyers in Sacramento has dropped from 60% of all buyers in 2000 to 20% today? Who is going to support this market? Unless you are selling a house, you CANNOT afford to buy. And you think it is going to double from here?
I believe that the housing market buble is a local phenomena. Make that a east and west coast phenomena. If you look anywhere in between, housing is very reasonable. I would love to get the money I have made in my house and move somewhere more reasonable. I'm really interested in Austin texas. Heard lots of good things about it. I would like to start buying real estate there and put it under property management. But I'm very skeptical about handing something over to someone and letting them "take care of it". Does anyone have any experience with long distance property management? I also analyze things to death and then dont do anything (analysis paralysis, they say). I guess its part of being an engineer. But this is a personal problem, i guess. Maybe should just do it and see what happens. Doing something is usually better than doing nothing !!
I think what the guy said above is very true about moving to the midwest. I know california is one of the greatest places on earth (I truly believe this), but you have to make sacrifices in your life to get ahead. Unless you have lots of dough (which I do not), this place is very difficult to make money in.
One more thing I would like to share. Recently read a book on Warren Buffett. To repeat one of his points: THe best times to borrow money and the best times to invest money never coincide. This makes a lot of sense. WHen money is easy, asset prices are usually inflated. We know that borrowing money right now is about as easy as most of us have seen. But, here in california, assets are outrageous. But I dont think that is the case with the midwest and south. So I truly think this is an oportune time to be buying real estate in modest areas.
Any comments on all the bs I have written above?
Agree with onelicha.
I'm looking to sell SoCal property and buy out of state, likely in Texas.
Texas location is TBD but looking at Houston and Austin.
Any others looking here????
I was wondering about the high Ca. prices. Are the salaries high enough to justify the prices? If not, how do people afford it? Pa has some cheap real estate. I do not know if prices will reach Ca. prices anytime soon.
This is for Dallas, Tx reply...I'd love to know where you can buy those houses you're talking about! I'd like one or two-everyting I've looked at is really inflated, especially new. Can't' get folks to lower thier prices either...must be all of those easy home equity loans...share your info-I'll buy a $130k 4/2 on a golf course in a heartbeat!!!
Thanks :-o
Are the salaries high enough here (California) to justify home prices, you ask. I'm sure salaries are higher here than most places, but not nearly enough to compansate for the property values.
I give you an example. A friend of mine just bought a house with her husband. He's a sheriff (i assume he makes around $3800 take home a month), and she works as an adminstrative assistance (makes maybe $2000 a month take home). They just bought a house for $475,000. Loan for $415,000. Payment with taxes, insurance, & HOA are $3000 per month. With bills and and food that easily tops $4000. Is that considered affordable? I hope she doesnt plan on having kids because there is no way in hell they can live off of one salary.
This is a very typical story here in cali. People also think that they will be priced out of the market if they wait any longer, so they jump in. Lender will concoct a loan that will work for you, irrespective of whether or not you can really afford it. These interest only, variable rate, introductory rate, no money down, loans are allowing the bottom-sucking catfish to live like Salmon. You can't blame the loan companies for it. People need to be smart enough to know what they can and cannot afford.
chuci,
let me guess, you wanna buy in sac because you think prices are going to go up another 25% this year.
What can you rent that place in south sac for? I'm guessing around $1150 or so? Which means that the rent will be paying for just the Payment. Property taxes(1.1%), upkeep (+/-8% income), property management fees (+/-8% income), vacancies (7%), insurance(+/-$900/yr) are all up to you. I calculate it as a loss of $6000 for the first year. There's some tax benefit but I dont think that should justfify an investment. Kinda like buying a stock and saying that it's a good investment because if you loose money you can always write off $3000 per year.
Ya, I can see why it was bid up. Not too much around here in that price range (median at $330k). prices in that range go quickly !!
Forgot to mention something on the last email: The 6000 loss hinges on my guess that you will borrow 80% of the cost.
[[ Edited by Chuhi on Date 08/28/2005 ]
This is a little off the subject, but do any of you get bs like this to your private e-mails. I'm almost sure this guy is tied in with this website to try to get you to sign up on the pay-for-service. This must be a scam because if this guy was really serious he would have left a contact #. This was sent to my personal e-mail address at Yahoo. I think it's a little sleazy to use tactics like this to get people to pay. Read below:
This is a message from ChangeKing at www.TheCreativeInvestor.com:
Hello Onelica,
Do you have experince building houses from the ground up? Are you
willing to work (mainly supervise) a house going to be built in Bangor,
CA.? Have you ever heard of the Eagle's Nest Homes? Please write back to
me as soon as possible. Do you go to CCWB RE Investing club?
Later,
Jim
Go to http://www.tcinvestor.com/PrivMess-ChangeKing.html to send a
private message to ChangeKing.
-------------------------------
The Creative Investor
http://www.thecreativeinvestor.com
The Largest Residential Real Estate Investing Online Community
I was hoping that we can get this subject going on again. Since this is something we can all benefit from. Thanks.
Hello realztate,
I am about where you were when you first started this thread about 100 days ago. I am curious as to what you have done/seen/researched, since your original post on this thread. Do you have any ideas that may be helpful for us? Any good websites?
Thanks