All Forum Posts by: Kel S

Not really sure the story behind the auctions, but here is an example. It's an Absolute auction, no minimum. Maybe I'll attend one just to get a feel for it and see what it sells for. This auction company and several others have quite a few home auctions in my area.

http://www.pamelaroseauction.com/documents/4115%20Bowen.pdf

This is an easy question for me :mrgreen:

I'd:

* Tithe more and give more to charity
* Set my children up with college funds
* Buy a ocean front cottage in the Keys somewhere
* Buy a 40-50ft boat that we could travel to Bahama's with.
* Take a trip to Africa!
* Spend a lot more time in my studio painting & sewing.

Thanks guys,

See that is what my thoughts were as well. I just don't see people paying first/last and a deposit. There are other rental units they could get without having to do that.

Looking in our local newspaper at the house rental ads I notice most say the rent amount + deposit. Do any of you require first, last AND deposit. Or just first months rent + deposit? I was telling my husband that asking first, last, plus a deposit may shrink the potential renter pool considerably because of the cost they would need to have up front. He feels that having that last months rent would be better. That way if a tenant moved out without any notice we'd at least have their last months rent. What do you all think?

Has anyone ever done this? We seem to have a number of auctions around here and quite a few listed at "No Reserve". Just curious if they are worth checking into? Are they on the up and up in respect to do they have staged bidders (that work for them) to drive prices up? I've heard of that before with other types of auctions so wondering if it happens at RE auctions as well.

Originally posted by MikeOH:

2. Owning an income producing property free and clear is a wonderful thing.

Mike

I couldn't agree with this more. We are looking to invest in our second property and plan to pay cash. However, the one drawback to this is at some point (which we will find ourselves at after this second purchase) will be the liquid cash will run low. When that happens, at least for us, it will take some time to build it back up again and in the meantime we may have to pass on other deals. Unless of course we decide to try and finance something. Though I much prefer to own the property free and clear. I think there would be a high level of stress if we had a bunch of properties that were financed and went through having some not rented. Then the mortgage payments would fall on us. Granted, we allow a cushion for making sure we always have enough for taxes, insurance, etc., if there were to be a vacancy. But those mortgage payments on top of that can really add up.

Just my humble opinion and I'm new to this game and no expert.

How many of you have offered your properties on lease w/option to buy? What were the terms of that? Meaning did you charge X amount down up front and a lease term of X amount of time? After which point their down would apply and they would need to finance the rest after the lease period?

Also how many of you have done them where the potential buyers decided NOT to buy the home? Do you retain the down payment in those cases?

I'm trying to get a better understanding on lease/options and if they are a good way to go. Do you find you get better tenants w/a lease option? Or are they actually harder to find? Is there a adverage percentage you'd charge for the down payment or is that pretty flexible?

Thanks guys. I guess I still don't "get it". Let me give you an example:

House purchased for $31k
Repairs: $8k
Total invested: $39k

Rents for: $575
Minus taxes, Ins, maintanence: - $300
Total: $275 a month

$275 x 12 years = $39,600

Taking into account that there may be several months in between tenants when it's vacant. So add a cushion of 3 years for payback of our investment. That is still puts it free and clear by the time we hit 55 years old. Any positive rent monies at that point would be positive cash flow and possibly by then the house values will have gone back up. How is that not a solid investment? Sure a better investment would be to get a house like that for $20-25k, but those are extremely hard to find in the areas I'm looking and I just have no desire to buy something in the bad areas of town.

Thanks guys!

I guess I'm confused on the buy and hold concept. Our goals have been not to create a huge portfolio of rentals but to invest in a few that we pay in cash for and rent them out. So that in 10-15 years those rents will have "paid back" our initial investment and at that point when we retire we will have positive income coming in from a few rental homes. Am I way off mark here in my thinking? I would almost rather take $35-38k in cash and sink it into a house than the stock market or other investment. A house is tangible and yes it can depreciate or appreciate in value but I think in most cases will always be rentable.

Why didn't you all tell me this when I bought the first house? LOL! That one same scenerio, except that it's a bit larger (has full basement), same neighborhood/schools and picked it up for $31,500 cash I believe...can't remember exact figure at the moment. But the value on that one is probably in the upper 60's/low 70's range. That one needed just minor things. It's rented now.

The problem I'm seeing is if you want something in the better part of town w/good schools...you won't find those REO for much under 30k. The ones you do really need some serious rehab and we just don't have the skills to mess with those ones. Plus I'm finding the banks are getting a bit harder to negotiate with on price. On this house for example if we offered say 26k-27k...I'm almost positive they would reject it.

So is it not a good idea to invest ones capital into RE as a long term investment with the possiblity of a reoccuring income come retirement time? Are you all seeing that is too risky?

Does it make a difference that it's a cash deal?