advice needed

[rocksolid]

I live in NY and I have some extra cash in the bank doing nothing for me ( but making the wife feel sucure) I was looking at condo's in Florida and I see many 2 bedroom condo's for around 15K so I was thinking of buying one and getting a manager to watch over it and of course find a renter. I figure i would have some positive income and an asset as well. It can't be that simple right??

 

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[bflbob]

I'd worry about anything for $15k.

Are you looking at eBay or something?

 

[rocksolid]

No, on realtor dot com there are plenty of condos in palm beach and ft lauderdale for that amount. Please verify

 

[hatterasguy]

I was just talking with a guy today who went down to FL on a shopping trip and picked up three condo's, all for $40k-$55k. They are all close to the water, in Palm Springs I think and two are fully furnished. One is already rented for $1,500 a month!

Its freaken tempting!

 

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[MattThomas]

Go to another source and check condo prices in the area, just so you get a more objective idea of what prices should be for these condos.

Also consider how much rent you would get for renting out the property, and how much a manager would cost.

Once you have a better idea about these costs, and feel that this information is reliable, then consider moving forward. It CAN be this simple, just make sure the information you are getting are from reliable and trusted sources.

 

[Kung Fu Steve]

Maybe someone could verify this, but I have heard that the insurance rates are changing so drastically on coastal real estate because of the hurricanes.

Something along the lines of the insurance companies will not insure most of the house. You can't just replace a house if it's torn down by a hurricane. And I hear that people are trying to get out of these for this very reason?

If so, smells like opportunity... or at least sweaty feet in my dojo...

 

[undergroundking]

I don't know much about condos but why spend 15K on 1 condo? Why not use that 15K you have saved up to buy five 15K condos instead?

If you know what you are doing, you can make it happen. For example, you can convince the seller to take some of the equity now (2-5k down payment), take payments, and get the reminding of the equity at a later date.

You can rent it out where the rent money will cover the payments and make you a little profit. Meanwhile, you can try refinance the condo to give the seller all his money. I am not a fan of rentals but its just a suggestion.

 

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[hatterasguy]

There is only so much you can do remotely, call me old fashion but if the numbers work I would fly down their over a long weekend and look at a bunch. Plane tickets are like what a $130 each way? Plus a hotel and some food. $500 bucks and you will have a good idea what you are buying. Just because a property looks good on paper doesn't mean its a good buy. I have seen some real dud's that look fantastic on paper, just saw one this past Sunday actualy.

Do the legwork before hand, ie contact local agents that have these properties, so you can look at a bunch and make use of your time.

 

[callmelucid]

if it sounds too good to be true... it probably is.

if it is that cheap, look into WHY it is that cheap. maybe that WHY could be a reason no one would want to rent also. if it is a reason that is easy to fix, and you think you can fix it relatively cheap, then go for it. you are improving someone elses life by giving them a better home and you are making a nice profit in the process.

good luck

 

[GLC65]

It is not just a matter of purchasing a condo and renting it. Never trust anyone and be ready to be hands on. The distance between you and your potential new rental property is a problem. If it is vacant and nobody is managing it, you have yourself a major liability that with a savy scumbag, can bankrupt you. Look at the worst case scenario and pray for the best.

 

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[rxcknrxll]

When buying rental property, I'm saying be prepared for a long term hold and potentially significant drop in equity. As long as it cash flows, it's a good thing. If the dollar continues to depreciate, your cash flow might thin out, especially if rents get capped. Of course it's very arguable whether that will happen or not. that's why I'm saying hold it for the long term. Jim Rogers, for example, most recently said he expected this downturn to last as long as 20 years. We really are not at fire sale prices yet.

Still, the reason for my post is to say that even under these circumstances, buying rental property for cash doesn't make a lot of sense to me. High equity position...30% or more, sure, but owning it outright? why not have the tenant pay it down for you? With appreciation being absent for the time being, at least maximize your roi from other angles.

Please do consider that $15k really isn't very much money, and if you happen to be concerned with liquidity at all (it sounds like at least your wife may be), you may want to consider physical gold or silver, or some other vehicle altogether. Maybe I'm wrong and the dollar will be fine. But if it drops like many people think it will, think about the fact that under those circumstances, $1k cash flow on a rental property isn't going to be a good return. My rambling thoughts for the moment!

 

[andviv]

I get the feeling that this thread has a big share of NNWKIA advice.

Kung Fu Steve, the insurance is a problem for older properties. The newest FL building codes are very stringent and were designed with hurricanes in mind, so the newest properties (can't recall exactly, think it is 2000 and forward) get better rates.

In any case, the FL insurance company (Citizens of FL) insures properties in that area (mines are insured with them).

The rates are high (I pay around 1% of insured property value) but they are a local market condition, so it is almost the same for everybody.

Another issue with some FL locations (Miami and Orlando, for example) have high Condo fees (swimming pools, some have elevators, etc). Those need to be factored in.

The Cape Coral area, for example, has cheap properties, but there are reasons for it.

Where are the properties located? FL is a big state, you know?

 

[msa1]

bflbob,

Depends on where you're investing. We just bought a house for $11k in Ferndale MI. Were in (all day) for about 29k and have it listed for $64k. Even if we sell for $50 we'll still be ahead.

My realtor just bought one in the same town for $4k. I havent seen it but the property alone is worth more than that.

 

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[undergroundking]

There is only so much you can do remotely, call me old fashion but if the numbers work I would fly down their over a long weekend and look at a bunch. Plane tickets are like what a $130 each way? Plus a hotel and some food. $500 bucks and you will have a good idea what you are buying. Just because a property looks good on paper doesn't mean its a good buy. I have seen some real dud's that look fantastic on paper, just saw one this past Sunday actualy.

Do the legwork before hand, ie contact local agents that have these properties, so you can look at a bunch and make use of your time.

Why fly down there if you can look at a bunch of pictures from the computer? That is how we do it nowadays.

 

[andviv]

My realtor just bought one in the same town for $4k. I havent seen it but the property alone is worth more than that.

Unless it is a red-tape property, that you must demo and rebuild in a short period of time, or you will be sued. And then, even if you do that, the town/area is economically dead and the property's real value (what others are willing to pay for it) is half of what it would cost to upgrade or remediate.

And yes, saw that one happen last year to a guy I know.

Or, another case, buy a property in FL and the lot is classified as wetlands... then, you will have to pay a hefty fee to be able to build on it.

Or, a condo in a community that is in the middle of suing the builder for defects, but the builder is declaring bankruptcy, and now the local authorities are demanding the place be torn down because it does not meet regulation. As the builder does not exist anymore, the owners must pay for fixing the problem or the demo cost.

So, bottom line, due diligence is key. The cost of the property not always reflect the inherited liability.

 

[yveskleinsky]

Why fly down there if you can look at a bunch of pictures from the computer? That is how we do it nowadays.

Because pictures only tell about 1/4th of the story.

 

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[G_Alexander]

I was just talking with a guy today who went down to FL on a shopping trip and picked up three condo's, all for $40k-$55k. They are all close to the water, in Palm Springs I think and two are fully furnished.

Madoff's ex-clientele no doubt...:groove:



Be careful purchasing your first property far from where you live. The only time you should expand out of your area is if you really have to. If the potential in a different market is really that much better than your own market, then make the move to the better potential market and thrive.

Buying properties you cannot see or be at on a daily basis if needed is not the best idea for your first couple of properties. It is a high risk situation. Even after due diligence is done, you may get shafted by a ratty management company down there.

It would be more productive to get a property in your area and manage it yourself to get your feet wet. Once you understand the rental industry you can begin to automate the system.

Why not go right down the street and look for a good deal in Queens?

-Alex

 

[hatterasguy]

Why fly down there if you can look at a bunch of pictures from the computer? That is how we do it nowadays.

Pictures only tell part of the story. As in the deal I looked at a couple of weeks ago, pictures don't tell you about the smell of sewage because of a collection point for the entire city's sewers thats right next door.

 

[biophase]

Why fly down there if you can look at a bunch of pictures from the computer? That is how we do it nowadays.

Why would you ever spend that much money on something site unseen? If it's not worth a day and $500 to you, aren't you really just gambling with your money?

 

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[biophase]

I live in NY and I have some extra cash in the bank doing nothing for me ( but making the wife feel sucure) I was looking at condo's in Florida and I see many 2 bedroom condo's for around 15K so I was thinking of buying one and getting a manager to watch over it and of course find a renter. I figure i would have some positive income and an asset as well. It can't be that simple right??

BTW, cash in the bank doing nothing for you is really not that bad.

As for the 15k condo, I'd take a trip down there and look. What are the HOA's, taxes and insurance? A $15k condo may be $15k because the HOA is $400 a month, taxes are $2500 a year and insurance is $2500 a year. That brings your monthly cost to $850 a month even if you paid cash.

 

[msa1]

andviv,

Were allowed to fix them here. We only need to get a certificate of occupancy and were good.

He bought another one for 8k. He had just bought it and when I went to look at it there was another person sent there by the bank (I guess purchase notice was delayed) to price out demolishing it.

My friend lets alot of things slide that I wouldnt but even so, he has really turned it around.

 

[rocksolid]

I would buy something in NY but 15K will get you nothing, 50K will get you nothing too lol. Prices where I live are way over my head. I have some friends in Florida and I would make sure to do all the leg work before I jump into anything. Thanks for all the advice.

 

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[G_Alexander]

I would buy something in NY but 15K will get you nothing, 50K will get you nothing too lol. Prices where I live are way over my head. I have some friends in Florida and I would make sure to do all the leg work before I jump into anything. Thanks for all the advice.

What is your credit score? The lenders are very tough right now, but if you have a good score, a good plan, and a nice local bank (I know there are a bunch in NY); $15,000 can take you somewhere. It doesn't need to be in the metro area. Expand to the suburbs of NY. Look for a duplex or a quadruplex and try to find financing or get together with a friend to structure a deal.

You could even look into investing in New Jersey on the shore or in the hills.

It is all a matter of how much you are willing to make your money work for you. You don't have to look far; good deals are hiding all over. If I had an extra 15k lying around, I would put that money to work.

-Alex

 

[andviv]

It is all a matter of how much you are willing to make your money work for you. You don't have to look far; good deals are hiding all over. If I had an extra 15k lying around, I would put that money to work.

then, in the same way, don't let your lack of funds stop you. If you say there are deals hiding all over, go find a couple of them and sell them to investors with $15K.

Heck, go find a great one in Chicago that can be had for $15K, I am sure rocksolid or others here would buy it from you for $20K if it is worth the money. Do only three of those and then you have your own $15K.

 

[G_Alexander]

then, in the same way, don't let your lack of funds stop you. If you say there are deals hiding all over, go find a couple of them and sell them to investors with $15K.

Heck, go find a great one in Chicago that can be had for $15K, I am sure rocksolid or others here would buy it from you for $20K if it is worth the money. Do only three of those and then you have your own $15K.

I have not been letting them stop me. I have about $9000 and I have been looking through Iowa City and the suburbs for a duplex or a quadruplex for the last 3 months (I am not in Chicago, I live here right now for school). I have already walked 5 properties and I am building my credit right now. I will co-sign if the right deal comes along, but currently I haven't seen any with great potential.

Sure there are <15k properties, but I would rate them at a D+; C- level.

Keep in mind I am 19 years old. Financing is hard to come by at that age, especially when you are in college with almost no credit history. I have been looking and talking to people though, and doing what I can to take action.

The foreclosure market is just a drop in the bucket right now to what it will be.

-Alex

 

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[andviv]

No, I don't doubt the deals are out there.

My concern is that, it seems to me, you think the other guy is in a great situation because he has money and credit. And you don't.

But it also seems like he does not know if a deal is really good.

You could specialize in find deals. And then wholesale them to him. Or partner with him.

This sounds like the perfect case of a couple of a partnership in the making.

Maybe rocksolid's talent is to get excess of cashflow. And yours may be to find the deals. Put them together and bot will benefit.

Makes sense?

 

[andviv]

Forgot to add...

focus on finding the good opportunities.

let others find the money.

you put the opportunity and the people with the money together and you make money.

 

[AroundTheWorld]

that's why I'm saying hold it for the long term. Jim Rogers, for example, most recently said he expected this downturn to last as long as 20 years. We really are not at fire sale prices yet.

Source?

 

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[hatterasguy]

Jim Rogers was negative 10 years ago when he drove his jacked up SLK around the world...I think its his personality.