All Forum Posts by: Kel S

Here are pictures of our first investment house. It's a 2bed/1 bath with full basement and walkup attic. Before it foreclosed it sold to previous buyer for $82,600. The bank originally was asking $53,900 (I think what the previous owner owned). Then they dropped it to $49,900 and they had a accepted offer but the people could not get financing. So after that the bank dropped it to $38,400 and we bought it for $31k. Very minimal work really. It did need a new water heater and we painted the inside and did some other minor stuff. The house is located in the best school district here and nice neighborhood. We calculate rent could be $500-$525.

These are "BEFORE" pictures, so the inside looks MUCH nicer now.

http://www.picturetrail.com/sfx/album/view/20741389

We looked at 2 houses today.

The first one:

One was a very small (780 sq ft) 3 bedroom. Build 1940's. The living room was tiny...12 x 11. Then 3 small bedrooms - 12 x 11, 10 x 9 and 10 x 8 and 1 bath. Beautiful new 1 1/2 car garage detatched. Excellent neighborhood with top schools in our area. Needs work though...ie; drywall, tub surround issue...possibly termites, looks like a couple old leaks area on the ceiling in one bedroom but roof looks newer. No central air.

The second one:

Large house (1640 sq ft) 4 bedrooms. Built 1920's. Living room, formal dining, kitchen and breakfast nook off kitchen on main level. Upstairs there are 4 bedrooms, 1 bath and a bonus room that is darling and gives you the feeling of being in a tree house :mrgreen:. Full finished (w/carpet) basement. One car garage. Great neighborhood...not quite as nice as the first house but the same excellent top school district. Needs very minimal work...some new carpet and paint. No central air. Not crazy about there only being 1 bathroom (upstairs) for this sized house.

Both houses are REO's and the banks are asking the same price for each of them. In the 40's.

Now my question is for all you investors. Which house would you want to have in your rental line up? The smaller one that you probably could pick up for less money but will have to fix quite a bit. Or the larger one that you will probably have to pay more for but less work on it.

Also another question; Which house do you think will rent easier? Obviously the larger one would be a higher rent but it's a big house and the utilities will likely be higher for the renters. Any thoughts? Is smaller (less rent) sometimes better? Would you be nervous to buy the larger one because of the size and possibly narrowing the rental pool of families looking for a house that size?

Tom,

What do you mean by dirt legs? I've not heard that term before.

Dave,

We recently purchased a REO and we weren't able to get the utilities turned on until we had an accepted contract in place. Then we called and turned them on in our name. So same scenerio where the bank wasn't willing to turn them on prior to a done deal so to speak.

In our case the bank countered and only gave us 8 days to complete an inspection. By the time we received the paper work from the bank 4 days had already gone by :cry: So at that point we still didn't have the gas turned on and while we did have an inspector go through the house...we didn't know about the furnace. The gas company scheduled to come out 2 days AFTER the due date for the inspection. So we had to take a gamble and accept the house without knowing if the furnace worked. We were willing to do that knowing it may cost us $3,000-$5,000 for a new furnace if it needed one. The furnace in this house is probably 25 years old. Fortunately it does work and appears to work well at the moment. But there is the knowledge that we will probably end up having to replace it at some point in the future.

We did end up replacing the 40 gallon hot water heater for $800 installed. We had a contractor do that because it needed to be piped a bit different and that was a bit beyond our scope of doing.

The furnace was a big issue for me and I swear I held my breath until we had the inspector come back and turn that puppy on. I swear there was a collective sigh of relief from all of us.

Thanks guys for all your input. I really appreciate it. It's given me food for though definitely.

I guess it's a catch-22 because if the economy was great prices on homes would be much higher. All in all in most anything is a gamble and I guess the best we can do is find the safest bet possible.

We may have an opportunity to purchase another investment home. It's a nice house and while it does need a bit of work (enclosed back porch roof is leaking) so will probably need the back roof section replaced.

However, I'm a bit nervous to dive into another one and the reason is because I'm hearing and seeing a lot of rental houses sitting vacant. I know the time of year is probably a factor but I also talked to another investor who mentioned that he has 7 of his apartments sitting vacant and that is a high number for him. He said it's costly because he still has to keep them all heated while vacant.

This is in the Toledo, Ohio area and I keep hoping that it's just the time of year that is keeping the rentals empty. But my fear is there isn't a huge amount of jobs here and Ohio and MI (right across the border) have been hit hard by the downturn in the economy.

Anyone have any thoughts? Are my fears unfounded? Do any of you own rentals in areas where there aren't an abundance of jobs, etc., My concern is ending up not being able to rent it.

I guess I'm looking for a bit of confidence that buying another will be the right move OR that perhaps this area may not be the best to buy in further. Would be so much easier to just have a crystal ball to predict the future but since I don't I thought I'd come see what you all think.

Congratulations! Sounds like a fantastic deal!

Yes, we had to put 10% in earnest money down with our offer, along with proof of funds.

While I haven't actually rented yet, our first investment is a 2/1 bath and 890 sq ft. When I first thought of a 2 bed/1 bath I hesitated but I liked the layout of the place AND it has a full basement and walkup attic that are not included in the sq footage.

I know it's probably not the common "investor" way of thinking when looking at a home, but I could see myself living in this house so I got emotionally involved in the place (DOH!). But that's ok, it's in a great area, one of the best school districts and it's darling. So I don't think we'll have any trouble renting it.

I do wish the bathroom was a tad bigger though. You can sit on the toilet and rest your head on the sink LOL!

Heard back yesterday that the bank took a full price offer on it, no inspection contingency. In a way I'm actually relieved. I guess mainly because I'm so busy working on this other one right (painting, fixing little stuff) now and the thought of going through the foreclosure purchase again so soon overwhelmed me a bit.

I think there is a better deal out there and we'll keep our eyes open and hopefully make a second investment in the spring.

I like the island idea! It could be a time share or develop a resort. Members could stay at deep discount (:

Or why don't we pool together and by Rich's Cancun condo? I'm all for that...it's FREEZING here and 80 degree weather sounds heavenly right about now. (: