Background, I am currently in MT and am a full-time firefighter. I have been on BP for a very short time and have been listening to BP podcasts and trying to absorb as much info as possible. I have no RE experience. Currently in the process of finding partner/mentor.
This past year my grandmother in law passed and left her house (paid off and in north central Illinois) to my father. My mother and him have no use for the house except to end up selling it. Im tossing around the idea of buying it from them. It is in good shape structurally but was an elderly persons house so no updates in decades.
The kicker. I would have to give up my full time job of firefighting and move back to my hometown in Illinois. This idea came up yesterday while talking to my dad on the phone so the idea is very young and I am in no rush and neither are they to sell it. Housing in my area of MT is fairly expensive compared to where I would be moving in Illinois. Comparable 2-3 bedroom SFH are in the range of 50% less expensive in Illinois (rural 1-1/2 hours southwest of Chicago) compared to Montana. My first thoughts are to buy the house, do minimal updates so it's livable for my family (IE flooring, paint and appliances) then possibly HELOC it and then either flip or buy and hold duplex/Quad depending on which would be better for the market there.
What is everyone's initial impressions of the situation? what do you see as potential snags or issues I will possibly face? Again this is a very fresh idea that is being tossed around and I am not on a time constraint for the potential property.
To answer your question your audience would need to know the city the house is located in.
Properties vary widely from Chicago to Rockford to Peoria or down here between East Saint Louis and Glen Carbon.
The real question is "Are you willing to quit your job, give up your benefits and possible pension to move back to a state many are moving out of due to the political corruption in Chicago and Springfield?"
We have high RE Taxes and other issues. We would welcome you as a fellow taxpayer to share our burden, but would you be interested in that.
Hey @Joshua Mattson , thinking outside the box here but what do you think about this...
Your father continues to own the property and you continue to live where you currently do. You then rent out the house he recently inherited and manage it for your father. You two then split the cashflow each month.
In addition to this, your father could also take out a HELOC on it and loan that money to you for you to either flip or buy and hold a property you're interested in. You could then take the profits from this newly acquired property and pay your dad back for the money he loaned you. Obviously, the numbers would have to work but assuming they did, you could make out fairly well.
Assuming you bought and hold the other property, you'd then have 2 rental properties under your belt which you could recycle the cashflow with to purchase even more properties.
This is all contingent upon your father actually wanting to help you begin investing in real estate, of course. If he is, I think this alternate idea is certainly worth considering.
I wish you all the best with this - let me know how it goes!
@George Skidis Thank you for the reply, The house is located in Dixon, Il and that would be the area I would move to. Yes I see and have thought about the lost pension, benefits and full time W2 salary. Like I said this is a very new idea and looking for a little brainstorming from the masses.
@Dan Turkel This is an awesome idea and I appreciate the feedback. My concern would be my fathers health, recent knee replacement compounded by obesity makes him slow getting around. I do have a cousin that I could incorporate to facilitate communication to me (possible property management role) and liaison for the contractor on the updates. Just from quick real estate website rental search after updating the residence it looks like we would be in the neighborhood of $650-750 for monthly rent. Have you invested any out of state flips or rentals?
There is no logic in giving up your job and pension for one house. I do not see the upside to the house assuming you pay your farther it's true value. I also do not see how you could add value if you flip it with your father. Renting it at $650 - $750 hardly seems worth the effort involved.
I know most encourage buy and hold but most situations that present themselves by accident to new investors simply are not worth anything.
The best thing he could do is sell it and maybe loan you the money to invest.
@Joshua Mattson , I'm sorry to hear about your father's health.
However, despite his poor health, I don't actually think it would effect the plan I suggested. He would essentially just need to give you his OK for you to move forward with it. You would then run it from there.The fact that you also have a cousin who could potentially help out makes this potential plan even more feasible.
While I have not invested out of state, I probably would if the numbers made sense in a good deal like the one it appears you have.
At the very least, I suggest running this idea by your father and cousin and seeing what they think of it. It can't hurt to ask! I'm definitely curious to hear how it goes...
Dixon is a small rural market. Be prepared for the change if you are used to anything big city related. Appreciation is slow and rents are low. Not too say it is a terrible place to invest (everyone's situation is different) but just know what you are getting yourself into. @Joshua Mattson
@James Ihssen Yes I was born and raised there haha, this opportunity did not pan out. So I'm researching the market here in Great Falls, Mt where I live. Trying obtain all the the local market knowledge I can while I'm looking for my first deal.
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