I've been on here a couple of days already and I'm loving the discussion. Ok. I'm really just getting started in earnest. I have one property, an older but stately three unit in the downtown area of my home city. I've decided to go high end with this one, but I bought it right, so right now my numbers are:
Note taxes and insurance-$860 (15 year)
Water-60ish
Rents-$2200
Like I said, I bought it right, and made some cosmetic improvements. That said, I think it could appraise for significantly more than I bought it for. My wife and I find that out next week.
Best case, if it appraises out at around 105k, (which it may not, there are few comps and the place is older)
I'll have around 30k to play with. So I'm thinking the next logical step may be to use that as down payments on more properties or just one down payment on one property. I guess my question is, what do you do in my position? I feel like I have a really good thing going here and I want to try and keep it stellar. What are your thoughts?
if you intend to get financing for your next purchase you'll be required to put down 20-25% down for a NOO loan.
We will need more information. What is your investment strategy? From reading your post i would say buy/hold?
Now assuming you intend to buy/hold and you will be seeking a mtg for your next purchase then you need to scope around and see what good deals are around your area. That will help you determine how far your 30K( assuming the bank will let you take all of it out ) will go.
if you were getting into flipping and educated yourself on Private lenders and HML's then you may be able to use those funds to do a few flips, increase your liquidity, which will in turn allow you kick off a buy/hold venture in addition to flipping.
Bottom line, There are multiple ways to skin the cat(so to speak). Do more research, provide some more information on your local demographics, or better yet, present a potential deal and i'm sure alot of us will chime in on how to structure the deal.
happy investing.
Des
I used to work out of Palm Springs several years ago. What is the rental market out there like? Are seasonal rentals a good way to go?
I've taken a look at some properties west of the Banning pass such as Redlands and Beaumont, but I wasn't impressed. However, the Coachella Valley is an area I had some curiosity about. Thanks for any info.
Sorry, I guess I'm asking you questions instead of providing answers! ;-)
Have you found a lender that will let you pull cash out of your investment property? If not, that would be the first domino to fall.
I'm hoping that the answer is yes, and that is why you have an appraisal in the works. If you just ordered an appraisal for your own benefit, the lender will not use that for its own underwriting purposes, and you may find they come up with a much different number.
Paul, I'm glad you mentioned that. My situation is unique, both with my lender and in general. My lender only requires 10 percent down, and will take half of that in the form of a car title, piece of land etc.
I do wonder if I'm paying for that potential flexibility in the form of higher interest rate (6.5% fixed for 5 years with a 12% cap)
I've been in contact with them regarding this refi and they plan to send a guy out next week to do what I think isn't going to be a very involved appraisal, but which I think will be fairly accurate, and the lender will definitely do a cash out refi hence the potential seed money
Also, my situation is unique because my wife is a traveling nurse, and I'm willing to do anything temporarily. Who knows where we'll go. Its pretty much arbitrary. I was reading a few top ten lists of "best cities to invest in RE" and Omaha, Nebraska was on that list, so was Dallas and Austin, TX. We might go to Omaha, who knows? Why not go to the best place to invest and invest a while?
I'm not opposed to remote management if it doesn't reduce cash flow to untenable levels and if the company is excellent.
The city I'm currently investing in is home base, its our home town, and its on its way to becoming somewhat of a college town, with the construction of a new four year branch of Texas A&M. It was also featured in Forbes Magazine a couple of years back as the second fastest growing economy in cities with under 500 thousand people (behind Mobile, Alabama, I think.) Anyway, the possibilities are limitless, but unfortunately right now, the money isn't. Thats why I feel like I have one shot to really parlay my first property into something that will be really great. I just don't know where or what that is.
As to the Coachella Valley. We've been here a short time and will be here until at least May. I've talked to a few area real estate agents and investors at length and I think investing here would be a good bet if you could buy right.
I'm not sure of the vacancy rates on condos, but there are quite a few short sales happening and I'm told there is flip potential for sure. I think a buy and hold strategy could work with conventional leases for sure, though.
I do know there are many redeeming qualities about this area. I don't mean to rub it in, but I will since I'm just here for a bit. You guys are freezing, but I just went to farmers market and bought a crate full of fresh veggies! And the retirees love it. Whats not to love? In the winter time anyway. Summertime, I hear its hot as an anvil.
Yes, the summer months in Palm Springs are the off season. The place becomes a ghost town with only a handful of permanent residents wandering about. The hotels have plenty of vacancies and but several shops in the downtown area get closed up. Not a bad place if you're looking for peace and quiet.
I can speak to the values in Omaha. We have a fairly diverse investment community. We have a strong Section 8 demand in a somewhat depressed section of the city. Values verses rents can produce upwards of 20% on a cash return and that includes having a management company in place. Without credit being used, the total costs can be as low as the $20K's. If you have some private financing, you can really kill it.
Other parts of the town are more traditional, values have dropped to a point that making greater than 10% are likely not including the appreciation over time.
The thing that makes Omaha so appealling is that the economic downturn has hit us as lightly as anywhere in the country.
I am always looking to help others enter our market. I am available for either consultation or partnering.
If it interests you, get in touch with me.