Real Estate

[Gary H NC]

Re: Real Estate

I guess this could be a good time for my house buying venture...Thats if the interest rates don't go way up..:^

 

[--GQ--]

Re: Real Estate

KRS does bring up some good points. Rental Real Estate is not for everyone. When all is going well, it is good, but it can turn ugly quickly with a bad tenant or an unexpected problem. I know of a few people that got into rental real estate because it would pay the mortgage and they would build capital. That was great till an emergency or a major repair/remodel was needed. Then they were strapped for cash. One friend had to sell at depressed price because the unit was in so much need of repair and he had not been able to put any money aside for that - it all went for mortgage. Lost was about 5 years of work and worry.

Super U, that is probably one of the extreme cases. Perhaps bad management on your friend part. The fact that a person invests in Rental Real Estate implies the property has a plus rent to mortgage ratio. Investing in a property that yields negative ratio, on the other hand, is a foolish thing to do since you are digging into your pocket to supplement the minus on a property you don't reside in. Bad investment indeed. Furthermore, you need to have a minimum of 6 months mortgage payment stashed aside.

Also, before you enter into a contract with a tenant, you should do a credit check on the person as well as his employment history. A security and last month deposit up to the rent value should be part of the agreement. I find this process weeds out most of the bad tenants. So far I have not had any problem except on one incident where a tenant was a week late on her rent.

Perhaps another important issue often over looked regarding Rentals, you the landlord/home owner should make it in writing, any damages due to tenant(s) misuse shall be the tenant(s) responsibility. Dated pictures of the property should be taken prior to tenant(s) move in. And it is crucial that you inspect the property at least once a month.

Just my way of doing business.

 

[JB]

Re: Real Estate

I think rising interest rates have a lot to do with falling prices.

A lot of people buy monthly payments. A one point rise in mortgage interest on a $120K loan is $100 a month, on a $240K loan it is $200 a month.

A lot of people selling are trying to get out from under an adjustable rate mortgage that they got at 4-5% that will soon be 7.5-8%. They will take a lot less to avoid being upside down in monthly cash flow and threatened with foreclosure (sp?).

I won't sell The Hideout because: 1. It is paid for, and 2. I would get nailed hundreds of thousands in taxes on the capital gains. When my heirs inherit it they will get the first million or so tax free.

 

[aspeck]

Re: Real Estate

GQ, agreed with all you said.

 

[Reel Poor]

Re: Real Estate

I have one residential rental property left. I have slowly migrated into commercial properties. This is where the headaches have virtualy disappeared. These leasors (which are typically long term) are responsible for everything, they pay for maintainance, repairs, (even normal wear and tear) property taxes, and insurance, although I do carry a hefty libility policy. When the time comes and my last residential rental property is gone, I promise I'll never look back.

 

[KRS]

Re: Real Estate

Commercial is the way to go. Most tenants even instal their own leasehold improvements... making your property more valuable.

Like any sound investment portfolio (this has been written in the forum before), be sure you diversify. Real estate has risks.. and all eggs in one basket is a bad idea.

 

[mattttt25]

Re: Real Estate

i won't speak to real estate as an investment, but will say i believe it to be the single best investment strategy out there. my first investment earned $170K in 4 years when i sold. of course, that was extreme conditions.

as for the md/dc/north va area, we have seen the market correcting itself somewhat. we experienced an amazing growth over the last 4-5 years, with prices increasing 100-300%. guy would sell his house for $400K, next day his neghbor would list for $450K and get it. other neighbr would jump it to $525K and get that. It appeared there was no end in sight.

the median home price approached a half a mil. but we all know the economy has changed over the last 6 months to a year. mortgage rates are a full point higher than they were and continue to slowly rise. people are paying more for fuel and everything else, and have less money for their mortgage.

i bought my current home 6 months ago. i was in the market for 6 months at the time and finally found the right one at the right price. there were very few homes on the market and they never lasted. 6 months later, homes are reguarly sitting for 3-4 months and sellers are starting to lower their asking price.

to sum it all up, we jumped way too fast here. the experts predict prices to level or drop by 10% over the next year. but they do expect a 5-10% annual increase over the next 5.