The "be all" investment properties thread

[Diabolic]

thats actually a good idea the only problem would be if they get pissed and do what most forclosure people see wiring missing drywall busted stuff like that...

I can fix a lot of sheetrock for 7-$10,000. Heck I could redo the entire place for $2000. Wall, ceiling, doors, casings, cabinets, everything painted the same builders primer color. I have a 50hr a week full time job. I don't have time for 2 tone crap. Paint the carpet and all. New carpet is $100 installation for the entire place and about $1500.

[STANGGT40]

I can fix a lot of sheetrock for 7-$10,000. Heck I could redo the entire place for $2000. Wall, ceiling, doors, casings, cabinets, everything painted the same builders primer color. I have a 50hr a week full time job. I don't have time for 2 tone crap. Paint the carpet and all. New carpet is $100 installation for the entire place and about $1500.

i have a contact, where i get a TON of gray carpet for $2 per yard. they use it one time for trade shows, steam clean it, and sell it. it's actually a really good carpet, and it's excellent for rent houses. they use several different colors, but i like using gray the best...a good friend likes to use the black carpet in his rentals...he says they hide everything; blood stains, etc. he's renting to a little different quality of tenant, though! lol

[03mustangdude]

No. I sit behind a desk & monitor all foreclosures hitting the market (MLS) I get updates every morning @ 4am. I run the #'s on them, and when they're superstars, I present them to clients. I have contracts on them before I ever go see the property. Costs me nothing to get a house under contract, but as soon as I do, I go walk it to see how bad the deferred maintenance is, how the slab is. The courthouse is like a cattle call, and you have to drive the properties beforehand to see what's up. You're there bidding on 30 hoping to get 1. I would rather sit & email out contracts/offers & see how many come back taking my number.

There are many ways to buy distressed properties. I prefer the bank-owned properties, since it takes only 1/10th of my time each week, and I can pull comps with mouse clicks.

what site do you use to monitor the new forclosures? zillow?

[barronj]

what site do you use to monitor the new forclosures? zillow?

MLS. I'm a realtor, so it's easy. The one site that drives me crazier than any other is Zillow. My clients will find the craziest listings there, and they're rarely legit. Zillow is the parent company of Postlets, and anyone can fill out a postlet & have it populate in Zillow. You can keep renewing a postlet & have the information refresh in Zillow, just to keep the phones ringing (ie lead source), regardless of the legitimacy.

[Frank]

How much do you clear each month? Just a little more than the house payment?
Any of you using a management company to handle the business?
Do you have any company you would recommend or stay away from?
How much do they take?
Can they handle if its Sec 8 too?

[barronj]

How much do you clear each month? Just a little more than the house payment?
Any of you using a management company to handle the business?
Do you have any company you would recommend or stay away from?
How much do they take?
Can they handle if its Sec 8 too?

If you're buying a foreclosure property as an investment property, you're looking at 25% down, I believe.

As stated, 3/2's are the sweet spot, so if you can find 3/2's 70% below market value (where a foreclosure should be priced anyway), you will see returns/cash flow.

As examples, I've bought 3 bedrooms for $55,000, and they needed $3000-$5000 worth of work. If you put 25% down, you financed $45,000 (rough #'s), your monthly payment is around $450, including taxes & insurance. If you're renting it for $950, you're clearing $400/mo, if you're paying your property manager charges 10% (kinda high, most charge 8%).

There are repairs, service calls, any days vacant, any realtor commissions that your property manager charges, and other things that eat away at your bottom line, but overall, it's a great investment.

Most of the houses that perform like this would pay for themselves in 8 years, if you put the $$ directly back in to the property, even after commissions & management fees. I even calculate vacancy rates in to the equation, when I'm coming up w/ the cap rate (a measure of performance, how quickly it pays for itself).

Each market is different. Austin has the highest occupancy rate in Texas, and the highest rents as a result. Your numbers will vary.

You might be wondering why someone would pay $950/mo for a property they could own for $550/600 a month. Credit, responsibility, and the ability to save sets these renters apart from prospective home owners.

[347Mike]

No. I sit behind a desk & monitor all foreclosures hitting the market (MLS) I get updates every morning @ 4am. I run the #'s on them, and when they're superstars, I present them to clients. I have contracts on them before I ever go see the property. Costs me nothing to get a house under contract, but as soon as I do, I go walk it to see how bad the deferred maintenance is, how the slab is. The courthouse is like a cattle call, and you have to drive the properties beforehand to see what's up. You're there bidding on 30 hoping to get 1. I would rather sit & email out contracts/offers & see how many come back taking my number.

There are many ways to buy distressed properties. I prefer the bank-owned properties, since it takes only 1/10th of my time each week, and I can pull comps with mouse clicks.

If you are up for it I will buy you a nice dinner to school me on how to get started in this type of work.

I want to start buying property but its such a huge risk for the amount of money I am putting up. I would feel more comfortable with being walked through the steps as opposed to doing it all on my own.

[slow84lx]

If you are up for it I will buy you a nice dinner to school me on how to get started in this type of work.

I want to start buying property but its such a huge risk for the amount of money I am putting up. I would feel more comfortable with being walked through the steps as opposed to doing it all on my own.

I recommend that you do the same thing with several experienced people prior to tossing your money down on an investment of this size and risk.

[347Mike]

I recommend that you do the same thing with several experienced people prior to tossing your money down on an investment of this size and risk.

I used to work with a guy in Florida that does this but he is not a convenient resource due to the distance. He has tons and tons of properties but isn't selective to renting/selling. He does both and is pretty successfull at it. I don't think he is wanting to be super rich or anything but who knows.

[Frank]

If you're buying a foreclosure property as an investment property, you're looking at 25% down, I believe.

As stated, 3/2's are the sweet spot, so if you can find 3/2's 70% below market value (where a foreclosure should be priced anyway), you will see returns/cash flow.

As examples, I've bought 3 bedrooms for $55,000, and they needed $3000-$5000 worth of work. If you put 25% down, you financed $45,000 (rough #'s), your monthly payment is around $450, including taxes & insurance. If you're renting it for $950, you're clearing $400/mo, if you're paying your property manager charges 10% (kinda high, most charge 8%).

There are repairs, service calls, any days vacant, any realtor commissions that your property manager charges, and other things that eat away at your bottom line, but overall, it's a great investment.

Most of the houses that perform like this would pay for themselves in 8 years, if you put the $$ directly back in to the property, even after commissions & management fees. I even calculate vacancy rates in to the equation, when I'm coming up w/ the cap rate (a measure of performance, how quickly it pays for itself).

Each market is different. Austin has the highest occupancy rate in Texas, and the highest rents as a result. Your numbers will vary.

You might be wondering why someone would pay $950/mo for a property they could own for $550/600 a month. Credit, responsibility, and the ability to save sets these renters apart from prospective home owners.

In my case, this is a house I currently live in. 1600sq', 3/2/2, approx 86k owed. I'm thinking I will barely be able to get enough to cover the current house payment about $900. Not real sweet but I think I would really take a beating if I tried to sell. The house on one side of me finally sold after 1.5 yrs to a woman and her 5 chi'ren. No baby daddies in sight. The house on the other side is in foreclosure and the bank hasn't even started maintaining it yet. The neighborhood is clean and well maintained, but I can see the empty-nesters leaving and the ones replacing them I don't care to have as neighbors.

Anyhow, its easy since I already own it and it doesn't need any repairs and had several improvements.

[barronj]

If you are up for it I will buy you a nice dinner to school me on how to get started in this type of work.

I want to start buying property but its such a huge risk for the amount of money I am putting up. I would feel more comfortable with being walked through the steps as opposed to doing it all on my own.

I'm in Austin, but thanks anyway.

I recommend that you do the same thing with several experienced people prior to tossing your money down on an investment of this size and risk.

Agreed. You absolutely want to feel comfortable with whomever you're choosing for RE investments. Ask for references. Ask about their training in distressed property sales (you don't want a rookie handling a short sale, it will just drive you bonkers). You want someone who knows leasing backwards & forwards, knows property management pitfalls, and has a regular, affordable maintenance man & go-to electricians/plumbers/AC people. Ask them if they know what the service call costs are for each person (excluding the maintenance guy); they should, and it should be $60.

With the foreclosure market, an easy place to start, there are a dozen banks with a dozen different protocols. Your agent will know what to expect, who will be quick to close, who will drag their feet & fuck up the whole thing, twice.

I would have no problem giving references, and my best reference has regular appearances ("industry experts") on CNBC. So much so, that when i sold him his house, one of the big deals was his closet space, b/c CNBC never wanted him to wear the same suit twice- he had 40 or so, IIRC. 8500sf house, formerly owned by the CTO (chief technology officer) of EA Sports. He's easily my biggest client right now, but I'm spooling up w/ an attorney who'll outpace him quick, I think.

[jw33]

In my case, this is a house I currently live in. 1600sq', 3/2/2, approx 86k owed. I'm thinking I will barely be able to get enough to cover the current house payment about $900. Not real sweet but I think I would really take a beating if I tried to sell. The house on one side of me finally sold after 1.5 yrs to a woman and her 5 chi'ren. No baby daddies in sight. The house on the other side is in foreclosure and the bank hasn't even started maintaining it yet. The neighborhood is clean and well maintained, but I can see the empty-nesters leaving and the ones replacing them I don't care to have as neighbors.

Anyhow, its easy since I already own it and it doesn't need any repairs and had several improvements.

I'm in the same boat with almost the exact same setup. 1600 3/2 about the same equity, had it on the market for about a year and didn't feel like taking it up the ass just to sell it. We just rented it for $1300 and had folks applying daily to get in. I was shocked... Hopefully it all works out. We're not trying to become rich from the deal or do it full-time, but if we can just keep steady money rolling in we'll be happy until we feel like selling.

[03mustangdude]

I'm in Austin, but thanks anyway.



Agreed. You absolutely want to feel comfortable with whomever you're choosing for RE investments. Ask for references. Ask about their training in distressed property sales (you don't want a rookie handling a short sale, it will just drive you bonkers). You want someone who knows leasing backwards & forwards, knows property management pitfalls, and has a regular, affordable maintenance man & go-to electricians/plumbers/AC people. Ask them if they know what the service call costs are for each person (excluding the maintenance guy); they should, and it should be $60.

With the foreclosure market, an easy place to start, there are a dozen banks with a dozen different protocols. Your agent will know what to expect, who will be quick to close, who will drag their feet & fuck up the whole thing, twice.

I would have no problem giving references, and my best reference has regular appearances ("industry experts") on CNBC. So much so, that when i sold him his house, one of the big deals was his closet space, b/c CNBC never wanted him to wear the same suit twice- he had 40 or so, IIRC. 8500sf house, formerly owned by the CTO (chief technology officer) of EA Sports. He's easily my biggest client right now, but I'm spooling up w/ an attorney who'll outpace him quick, I think.

are you the property manager on these deals?

[barronj]

are you the property manager on these deals?

yep.

They get a pretty sweet package. I find it, get it closed, have it rehabbed (I manage everything), list it, lease it, and manage it. I don't charge for the GC part, because I wet my beak on the other 3 items. 3% on the deal (paid by the seller), 50% to lease it (low), and 8% to manage (average). Most of the properties need no oversight at all each month.

[03mustangdude]

do you suggest property managers at a certain point, when someone has a said number of properties or can they/you be beneficial at all entries to the investment game?