I'm looking at buying my first investment property around the 30k price that needs tlc, hope to do work to it (20k max)and turn it into closer to a 90k property in my area. If it goes through, I don't know if I want to/should buy and hold for rental or fix and flip. Doing the investment on HELOC and this will consume half of my available capital. This will be my first investment experience of hopefully many. I have a lot of carpentry background, so sweat equity is hopefully in my favor, but this is the first time I have the capital available to do so.
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
7y
@Zack Heath that’s always a risk you have to weigh. Consider it as opportunity cost. If you know you can refinance it’s probably worth it. That’s the bigger risk because there will always be another deal. I’m always passing up deals while my capital is tied up.
Rental Property Investor · Clermont, FL · Member since 2016 · 266 posts · 81 votes
7y
Hey @Zack Heath! Good for your for taking the leap and moving forward! Where are you located? Are you sure you can find a property in the 30k range? If so, what kinds of properties are you looking at? 30k just seems like a very low target (but I know every area is different).
Brandon, I live in western North Carolina, near Asheville; these properties don't come often but this is a 3 bed 2 bath manufactured from 1986. With its age (and being manufactured) I expect the finished value to be low, because not many people in our area are looking to live in a 30 year old manufactured home, which is what is making me consider renting. It is a foreclosure that went to the bank after previous owner passed.
Asheville, NC · Member since 2017 · 385 posts · 274 votes
7y
@Zack Heath, I think you may be surprised how many people are willing to rent a manufactured home given the price of purchasing a home in our area and the demand for rentals in general. I don't personally own one though so I cannot speak from experience. If it is on a piece of land that has utilities and septic, it sounds like a great deal at $30k. If you do go the rental route, I suggest you take people with pets as that seems to be pretty much non negotiable anymore. Best of luck on your endeavor!
Real Estate Coach · Asheville, NC · Member since 2016 · 176 posts · 172 votes
7y
@Zack Heath if you are having second thoughts and want to assign your contract, I may be interested, depending on the location. I’d be happy to pay a nice referral/wholesale fee.
@Jon Arsenault thanks for the input. I couldn’t agree more with the pet scenario; it has city water and working septic, so if I can keep rehab scope in check it would be a great rental, but it would tie up my investment capital until enough rent came back. Are there any good ways to refinance or put that amount into a separate loan so that I can be ready for another investment property shortly into the future? That is my only objection for holding and renting
@Jon Arsenault thanks for the input. I couldn’t agree more with the pet scenario; it has city water and working septic, so if I can keep rehab scope in check it would be a great rental, but it would tie up my investment capital until enough rent came back. Are there any good ways to refinance or put that amount into a separate loan so that I can be ready for another investment property shortly into the future? That is my only objection for holding and renting
@Ryan Howell are there any quick ways to liquidate my capital though? If I tie up what capital I have in this I will run the risk of missing future potential investments because of a lack of capital.
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
7y
@Zack Heath that’s always a risk you have to weigh. Consider it as opportunity cost. If you know you can refinance it’s probably worth it. That’s the bigger risk because there will always be another deal. I’m always passing up deals while my capital is tied up.
@Ryan Howell that’s true, thanks for the input. Main goal is just to make it worth it in the end. Looks like buy and hold for rental is usually going to be the best way to me.
Asheville, NC · Member since 2017 · 385 posts · 274 votes
7y
@Zack Heath, can try and add value and refinance is really all you can do but don’t get the shiny object syndrome. Finding any deal is hard enough in this market. With appreciation and equity paying down it may add value to itself quickly enough .
Lender · Asheville, NC · Member since 2019 · 60 posts · 50 votes
7y
Is the land part of the deal? If not I would make sure to identify lot rent costs and if the property is eligible to be leased. If it comes with it I say go for it. Anything reasonably habitable will rent in our market and rarely does anything come up for sale under under 100K.
Specialist · Carlsbad, CA · Member since 2018 · 1k+ posts · 638 votes
7y
@Zack Heath If you are in need of urgent money and think you might be able to get a deal in your area, it's best to flip it. You never know when the value might depreciate in the long run. However, if immediate cash is not necessary for you it's always good to have rentals for cash flow. There are obviously many other variables to look out for, so, make an accurate calculation of the numbers and determine what works best for you.