All Forum Posts by: Clint Dorris

If it is rural, then likely you could just go up the road and buy vacant land for the same price or less.

In appraising this is called highest and best use.  You tear the property down when its best use is worth more than the current value plus the cost demolition.  So if the property as it sits is worth $50,000 (building plus land) and the cost to tear it down is $10,000, it would be worth it to tear it down if it were worth $60,001 as a vacant lot.  Of course, this doesn't calculate any risk or entrepreneurial incentive.  

In rural areas, though, there is not enough demand for land for this to take place.  This normally happens in dense areas where new vacant lots can be sold for much more than the current value.  

A guy as young as you with your attitude almost seems fake.  You will do well.  I'm currently paying rent in a cooperative work space that is not a necessity just so my 36 years young can meet guys like you.  I'm in small town West Tennessee.  

Clint

Steve, 

You seem like a smart, good person.  Job well done.

Your situation is different than many in that you don't have to have the money, and you don't need a big loan.  I agree, you should still analyze the deals like anyone else, but most of the rules of thumb weren't designed for guys like you.  These new properties cost more and don't fit the rules of thumb, but they also don't have the expenses and headaches.  Now, as a guy who may get bored in retirement, you may want or enjoy those headaches, but you seem to be doing just fine.  A little loan wouldn't be a bad idea, but I see no use for you to go to full leverage and take on too high risk, when you likely have it made as you are.  

Also, getting a loan should be no problem for you, and you should be able to get as good of a rate as there is.  You should go to a local bank in Hendersonville (not one of the big chains) and meet the commercial lender(s).  A guy like you with money to invest is a low risk, no brainer to get a good rate. Those guys are looking for guys like you.  If traditional loans are 3%, you should get near 4% for an investment.  It's also good to know those guys because they deal with other investors, contractors, and realtors.  The only risk you would be to them is not having a steady income (once you retire).

Nice tool.  I'd never rely on it for values, at least not in my area.

I have a friend who just sent out 55 letters specifically targeting the UM at Lambuth area.  It could see revitalization, but it is likely a long play.  They just got a $1,000,000 donation, and the downtown area is seeing some revitalization, and Lambuth is the next most likely area.  

There is a variety near Muse Park.  Most are old and small, but there are a couple of decent neighborhoods over there.   I own one near there.  

I'm in rural Western Tennessee, and I don't know much about Western Kentucky, except the rural areas probably aren't much different than here.

Here, you can buy old trailers on 1 acre for that price all day.  You can buy 1 acre in the country for $5000 to $10000 easy.  You could buy trailers for $5000-$10000 easy.  So, to me, it may not be that great of a deal.  I'd investigate what you can get other trailers for. Financing for trailers is extremely difficult, and that has driven the prices way down b/c its mostly investors or cash buyers, except in new, nice homes.

Also, $18,000 for a 1/4 acre sounds high.  I'm sure that or higher in subdivisions happens all day long.  But in the country, you can often get 5 acres for the price of 1/2 acre in a subdivision.  

The income numbers seem to work, but there may be better or similar deals out there. Again, I'm not in KY, but in a similar rural area.  

Love it!

Good question.  I've been wondering the same thing.  It doesn't seem like anyone is doing it on a major level.  The experienced guys here, just buy and keep.  My town is 60,000.  I know all the areas, but I wonder how the numbers trickle down.  For instance, they say you might get 1 deal out of 1000 addresses.  Well, there may only be 5,000 addresses I'd focus on in this area.  I'll PM you.

It all really depends on your goals.  But, being cash strapped, I agree with those above.

No one has said it clearly yet, but something IS going to happen in 4 years.  Odds are, something will happen in the first year, or immediately.  

In my area we have 4-plexes of 3600ft and 4000ft that sell for the same price.  It doesn't seem that rent changes much over 100ft/unit in a 4-plex.  

That being said, I would at least use the comparable property $/ft as a red flag.  Can you get all the other numbers the same but pay less per foot.  If so, you should.  If everything else is similar, it may just be a useful stat.  

The biggest problems with price per foot are that age and site value are rarely considered (they usually matter less in rental property).  But, a property on a $500,000 lakefront lot will sell for more $/foot, than one on a $20,000 rural site.