Real Estate Investing?

[RealMoneyIssues]

Is real estate an investment anymore?

Does anyone believe we will see property growing like it has over the decades?

Is real estate just another place to live without the gains in value?

These are just questions I was curious about as I am closing in a couple weeks on my first house since 2006. Still going to buy, just curious what y'alls thoughts were.

Thanks !!

 

[Willwork4Alpha]

Real estate can still be a great investment if analyzed from a cash flow perspective. Residential or commerical property that produces a positive return after debt service is easier to find now than at any time over the past decade. I'm actually very close to purchasing a second residential rental property in the next month. Here in Atlanta you can purchase a decent small home for under $75K and expect rents of about $950 per month and cash flow $450 per month after debt service. This equates to a 36% ROI for your $15K investment. Not bad if you are willing to put up with managing a property.

Purchasing a house to live in and hoping the to see significant equity appreciation isn't an investment in my opinion however. Even if you see gains in equity you aren't really gaining anything unless you plan to sell and not buy another house because all other properties will have appreciated too. Closing costs and realtor fees also eat up a big portion of any equity appreciation. That said, I still think this is a once in a lifetime opportunity to buy the house of your dreams if you have the credit and a bit of cash. The low interest rates and rock bottom prices wont last forever once all the forclosure inventory is flushed out (who knows when that will be).

 

[law87]

Im currently station in maryland, gonna be here for 2-3 years i figure if im paying for rent i might as well get a house thay way when i sell the house back i get some of the money back...hopefully things goes my way

 

[jpcavin]

Im currently station in maryland, gonna be here for 2-3 years i figure if im paying for rent i might as well get a house thay way when i sell the house back i get some of the money back...hopefully things goes my way

Why sell? Why not rent it out when you transfer? Even if you don't pocket the rent (depressed market), someone else is paying your mortgage. Do this at every duty station, and before you know it, you're a real estate tycoon like me.

 

[RealMoneyIssues]

Why sell? Why not rent it out when you transfer? Even if you don't pocket the rent (depressed market), someone else is paying your mortgage. Do this at every duty station, and before you know it, you're a real estate tycoon like me.

I would agree, but there is a lot of logistics and risk to that...

How many times have you had a house without a renter? How hard is it to manage a house in Norfolk and you're in San Diego? Does your significant other have the same risk tolerance?

 

[jpcavin]

I would agree, but there is a lot of logistics and risk to that...

How many times have you had a house without a renter? How hard is it to manage a house in Norfolk and you're in San Diego? Does your significant other have the same risk tolerance?

My houses have always been rented. I month gap tops due to upgrades, and such that I wanted to take care of. Management company does all the work for a commission. My significant other and I have the freedom to pursue our own ventures. I have 2 houses in California(Oceanside, Seal Beach), two in Florida(Tampa, Pensacola) and one in Texas(Austin). All are paid off except for Austin and an equity line of credit that I used to purchase my home in Pensacola. I make double mortgage payments (rent plus my own money). Even is one house goes unrented, the rent from the other houses any shortfalls. The tax write off and the depreciation is priceless!

 

[Birchtree]

I can count 4 or 5 vacant houses in my neighborhood right now and if I were 20 years younger I might bite - but I currently don't have the incentive. Equities are easier to deal with.

 

[JTH]

I would agree, but there is a lot of logistics and risk to that...

How many times have you had a house without a renter? How hard is it to manage a house in Norfolk and you're in San Diego? Does your significant other have the same risk tolerance?

I worked a job for a landlord back in the 90s. He had maybe 10 houses he was renting out, banking good coin, it was his fulltime job. That's the good news. The bad news is 1 bad renter trashed a house for about 15K in damage. I'm sure he recovered, but it wiped him out for a bit.

 

[jpcavin]

I worked a job for a landlord back in the 90s. He had maybe 10 houses he was renting out, banking good coin, it was his fulltime job. That's the good news. The bad news is 1 bad renter trashed a house for about 15K in damage. I'm sure he recovered, but it wiped him out for a bit.

That's true. Had 1 renter do some damage. If you don't have 3-6 months rent set aside, it could give you an ulcer! You can always lower the rent in a depressed economy.
I would never manage the properties myself. It's just too much of a pain for me. I would rather pay the commission and just let someone else do the work. Just have to make sure you inspect the property from time to time to ensure the management company is keeping up with general repairs, etc.

 

[GUCHI]

jp/MB

i also have a rental property 12 yrs left to pay off. we flipped this house about 6 yrs ago and when we went to sell is when the bottom fell out of the housing market. soo we decided to rent. we have had 2 very good tenants and this time we went with a rental service so that the payments would not be interupted. she gets 6% of monthly and handles most everything. hopefully we will close on our 2nd rental next week. the wife and i decided to take advantage of the low prices and interest rates to get a nother rental. we are having to kick in some on the first rental since the rent does not cover comepletely. i foresee these as income later or an asset to my 2 boys when we leave them to them. we are considering a 3rd rental out of necessity for our youngest son to stay in wiith a roomate. what are your and the MBs thought on this ? and how could i take advantage of this situation and get the most BANG for the buck?
thanks
john

 

[jpcavin]

Guchi

I started purchasing houses at each of my duty stations because I wanted to leave something behind for my children when I died.
At the time, I did not know anything about investing (not much has changed:laugh nor did I have the money to invest. I thought real estate was the easiest way for me to do that. So far it has worked out for me. That being said, I would not do business with my children. That is a judgement call. How dependable/reliable are your children? I don't trust mine enough to make payments neither on time nor consistently. What happens if they can't pay? I would rather not be in a position where I have to practice tough love. :suspicious:

 

[GUCHI]

jp
my son is 19 and is going to community college and working at a nice beachy restuarant in wilmington,nc. his lease is about to run out in 5 wks. my wife and i are already kicken in rent for him to stay where he is, so that may not change until he gets a full time job and can make it on his own. my boys are really responsible. the 22 yr old bought a house when he was 18 and is now going to school to become an electrical engineer. the youngest may want to further his education and go to culinary school $$$$$. i really don't like townhouses because of the HOAs, but this 1 caught my eye. asking $79,900, built 2001, tax assessed value $ 153,818 3 bed 2 full bath HOA $83/mnth. my thought is my son could have 1 maybe 2 roommates and they could get the mortgage payed quickly especially with 2 roommates. the townhouse is located 15 min. from the beach and eventually it could possibly be my beach home(3yrs before retire). checked with the bank and it would qualify as a 2nd home so all that applies to 2nd home would count here. contacted realtor to see house possibly this sat. any thoughts?

 

[jpcavin]

jp
my son is 19 and is going to community college and working at a nice beachy restuarant in wilmington,nc. his lease is about to run out in 5 wks. my wife and i are already kicken in rent for him to stay where he is, so that may not change until he gets a full time job and can make it on his own. my boys are really responsible. the 22 yr old bought a house when he was 18 and is now going to school to become an electrical engineer. the youngest may want to further his education and go to culinary school $$$$$. i really don't like townhouses because of the HOAs, but this 1 caught my eye. asking $79,900, built 2001, tax assessed value $ 153,818 3 bed 2 full bath HOA $83/mnth. my thought is my son could have 1 maybe 2 roommates and they could get the mortgage payed quickly especially with 2 roommates. the townhouse is located 15 min. from the beach and eventually it could possibly be my beach home(3yrs before retire). checked with the bank and it would qualify as a 2nd home so all that applies to 2nd home would count here. contacted realtor to see house possibly this sat. any thoughts?

I hate HOA's as well. However, $83 doesn't sound too bad. $79,900 is small enough mortgage to handle if you had to pitch in with payments once in a while. And the beach locale and size is a plus!
Always plan for the worst and hope for the best. (i.e. have a few months mortgage saved up).
Like I said, judgement call. I would do it if I had your sons.

 

[GUCHI]

jp
thanks for the props and input ! its good getting a view from someone else. i was not sure on this townhouse until after i spoke to my oldest son last nite and he informed me on a few things that i overlooked. im ready to check it out and if it checks out , to make an offer.

 

[GUCHI]

jp
your name would not happen to be lynn would it?

 

[jpcavin]

jp
your name would not happen to be lynn would it?

Nope. Judy

 

[bmneveu]

My experiences so far investing in real estate while serving in the military:

https://www.youtube.com/watch?v=18hiOoHgIu4