All Forum Posts by: Jay Oliver

This is exactly what is happening with my area. I am assuming that this means rents will likely go down over the next few years.

I thought that was a great comment too; how does one go about finding out whether an area is declining?

Can anyone tell me...when you get a loan, how do you factor in the cost of acquiring the loan since it is a one-time cost?

j

Thank you everyone for your thoughts, advice and questions. It is all very helpful, eye opening and thought provoking.

Hi Wheatie,
I searched several reports and yes, appreciation rates have certainly slowed and fallen in Ocala. In answer to your other question, job growth has averaged 5.8% in the past two years. Less than a year ago, Ocala was rated the best performing city in terms of sustainable jobs and economic growth (out of 200 metropolitan areas in the United States) by the Milken Institute in California.

Ocala has a stronge manufacturing sector that has grown 70 percent over the past five years, outpacing nearly all the rest of the nation. Our unemployment rate is also 1.1% below the US average, and we our the horse capital of the world. :)

Our low cost of living is probably a factor in our population growth, which has been 22 percent over the past 5 years. Don't know if all that will help or not.

The low cost of living keeps rents low, but property taxes are high. 100,000 house will usually rent for no more than about 700 - 850 tops and the taxes can be anywhere from 1,000 to 2,200.

Maybe it is not the best time to get into this after all... Or maybe I need to look for another slant. But most of the pre-forclosures and REOs are in parts of town that rent for the above. I've thought about purchasing houses for $30,000 - $50,000 on the West side of Ocala where the property taxes are very low, but it is a rough part of town and being a woman, I thought better of it.

Thanks PNW - I love the suggestion to find out what the locals guys are doing to make money with real estate. That's a good next step for me.

Thanks for listening!

Ahhh....of course. Appreciation and debt reduction build equity but do nothing for cash flow. Thanks for pointing that out.

So basically, I just need to offer the figure that will give me an adequate amount of cash flow and not worry about how far below market value it is.

With my first post...am I missing any obvious expenses that I should be considering? (I know I didn't put 10% for a property manager...I plan on doing this myself as it is my first investment property.)

Thanks for the response. I appreciate it!

What an interesting, informative and exciting site! I have been lurking and learning here for weeks now. Thank you to all of you who share your expertise, experience and wisdom.

I have been actively looking for my first investment property - single family home - and am having a hard time finding anything in my area that is far enough under market value to produce $100 after OE.

My plan is to buy and hold and most of what I find looks like the figures below, which is actually an REO I am going to make an offer on on Monday:

3/1 and 984 SF
Listed for 77,900
Estimate Appraisal: 93,500 - 114,000
Sold in 2006 for $110,000 - but that was during the boom...
Will Offer: 69,000
Bank Loan: 80%
Down Payment: 20% - best my area offers
Taxes: 1693.00
Insurance: 1,100
Repairs: approx 6,000
Will probably rent for about $750 - rents not = to the 1% rule in Ocala.

After I figure the taxes, insurance, 5% vacancy rate, 8% of income for maintenance (don't really know how to account for this as I'm a newbie), $210 electricity/water holding costs till rented per year, $200 for advertising to rent it per year, my OE are at 48% of my operating income . 8,400 - 3855 = 4,209.

I will have 4,209 left to pay P & I, and I will be negative a couple hundred dollars the first year. (After taxes and depreciation I will be + 300 or so). At this rate, it will take me 7 or 10 years to make $100.00 per door at 4% appreciation and debt reduction...

I figure the numbers mean my original offer is too high and I need to offer less. However, I've read that banks don't usually go below 10 to 15% of Market Value (or is it listing price?) on REOs.

I'm so new that I figure I'm leaving something out or just going at it the wrong way. I certainly don't expect to get rich quick off of real estate - but do want to begin making smart investments that, down the road, are going to allow me to retire VERY well... :D

Any input would be greatly appreciated.