RE investment options and questions…

[knowbuddy]

I’m currently considering a couple of options for real estate investing and I’m wondering if you might be able to help me…

I currently live in a condo in Normal Heights that I own outright. I’m planning on refinancing the condo to pull out $80k (of $125k, LtV 64%), add that to another $80k I have in the bank, and start investing. I can either try and go big: Find units, use owner occupied financing to buy something that nearly pays for itself in rental income… but I’m picky and afraid living with my tenants could blow up in my face. Or I buy condos – rentals that will cash flow, with 30% down apiece. I’m in a unique situation and poised to buy because my 2010 income was through the roof and my credit is near perfect. So for the sake of haste (interest rates won’t stay this low forever), I’m considering investment properties over something that I’d have to live in (and would therefore be much more picky about).

It’s a complex decision and I’m not sure what to do.

Here are a few questions that I guess might be most helpful…

1) Who’s the best mortgage broker in town who can help me get great investment loans?

2) Would it be worthwhile trying to buy little condos quickly with cash, only to “refi” 6 months down the road? (Note I am concerned rates are about to rise quickly.)

3) If I’m interested in cash flowing, where should I look to find good candidate properties? I have friends and family around Chicago, so that might be a good option for me. I’ve read here that properties in the Midwest can bring in 15% cash on cash. Where do I sign up for that deal?

4) What about using owner occupied financing to buy here in SD? The obvious problem I’m finding is that essentially nothing cash flows unless you’re in less desirable neighborhoods.

4b) In a more desirable neighborhood, I’ve found one unique place that falls about $1k short of covering the mortgage if I put down 20% and I rent out the front house. I’d be in the granny flat, and I’d be happy to do so… but the potential for large expenses, plus maintenance, etc… It seems risky. If it worked, I’d have a large 3 bed 2.5 bath worth over $600k (in 2011 dollars) for $1k a month at the end of 30 years… with a yard and garage in the mean time.

4c) What’s a conservative number to budget for maintenance and groundskeeping on a large SFR?

Thanks in advance.

[barnaby33]

So Bernanke finally got to you did he? Well that’s a shame.

There is no best option except to stay nimble. RE is not nimble and while yes rates will rise at some point. I think your fears of imminent rate rises are premature. Meanwhile your cash is being destroyed, but at a slower pace than being an “investor” in any real estate.

You’d have to leave SD to find anything that might make sense as a rental. People gotta live somewhere but that doesn’t mean they have to live where you own rentals!

Josh

[barnaby33]

So Bernanke finally got to you did he? Well that’s a shame.

There is no best option except to stay nimble. RE is not nimble and while yes rates will rise at some point. I think your fears of imminent rate rises are premature. Meanwhile your cash is being destroyed, but at a slower pace than being an “investor” in any real estate.

You’d have to leave SD to find anything that might make sense as a rental. People gotta live somewhere but that doesn’t mean they have to live where you own rentals!

Josh

[barnaby33]

So Bernanke finally got to you did he? Well that’s a shame.

There is no best option except to stay nimble. RE is not nimble and while yes rates will rise at some point. I think your fears of imminent rate rises are premature. Meanwhile your cash is being destroyed, but at a slower pace than being an “investor” in any real estate.

You’d have to leave SD to find anything that might make sense as a rental. People gotta live somewhere but that doesn’t mean they have to live where you own rentals!

Josh

[barnaby33]

So Bernanke finally got to you did he? Well that’s a shame.

There is no best option except to stay nimble. RE is not nimble and while yes rates will rise at some point. I think your fears of imminent rate rises are premature. Meanwhile your cash is being destroyed, but at a slower pace than being an “investor” in any real estate.

You’d have to leave SD to find anything that might make sense as a rental. People gotta live somewhere but that doesn’t mean they have to live where you own rentals!

Josh

[barnaby33]

So Bernanke finally got to you did he? Well that’s a shame.

There is no best option except to stay nimble. RE is not nimble and while yes rates will rise at some point. I think your fears of imminent rate rises are premature. Meanwhile your cash is being destroyed, but at a slower pace than being an “investor” in any real estate.

You’d have to leave SD to find anything that might make sense as a rental. People gotta live somewhere but that doesn’t mean they have to live where you own rentals!

Josh

[JBurkett19]

If it were me, I would not invest in anything that has HOA fees. Maybe buy a small apartment building? With a small building, you will most certainly have at least a few of the untis rented at all times, plus small units (1 & 2 bed)are easier to keep rented.

I would not live in the same building as your renters. Bad idea. Even the granny flat idea isn’t a good one, unless you can rent to family.

Another alternative is to buy a small house in a decent place. Just make sure your rental income will completely cover your expenses.

I have a SFR that I’m renting and I have found out that you need to have cash reserves to properly cover unexpected expenses. If you’re cash strapped, because you don’t get enough money from rent to cover expenses with a little for maintenance, you’ll be hurting.

My monthly maintenance expenses including lawn care are about $125 per month. This includes a cushion for large expenses like H2O heaters, faucets, appliances, plumbing, etc.

I think you’re on the right track, and rates will not get lower, not to mention if we get crazy inflation over the next few years, RE is the best place to be. Your cash will be worth less in a high inflationary environment.

Never under estimate the value of a house. Everyone needs a place to live, and there’s intrinsic value in a good place to live. In the long run, houses are worth much more than paper money. I think it’s best to focus on what is truly necessary in life. And I believe housing is one of the true essentials.

[JBurkett19]

If it were me, I would not invest in anything that has HOA fees. Maybe buy a small apartment building? With a small building, you will most certainly have at least a few of the untis rented at all times, plus small units (1 & 2 bed)are easier to keep rented.

I would not live in the same building as your renters. Bad idea. Even the granny flat idea isn’t a good one, unless you can rent to family.

Another alternative is to buy a small house in a decent place. Just make sure your rental income will completely cover your expenses.

I have a SFR that I’m renting and I have found out that you need to have cash reserves to properly cover unexpected expenses. If you’re cash strapped, because you don’t get enough money from rent to cover expenses with a little for maintenance, you’ll be hurting.

My monthly maintenance expenses including lawn care are about $125 per month. This includes a cushion for large expenses like H2O heaters, faucets, appliances, plumbing, etc.

I think you’re on the right track, and rates will not get lower, not to mention if we get crazy inflation over the next few years, RE is the best place to be. Your cash will be worth less in a high inflationary environment.

Never under estimate the value of a house. Everyone needs a place to live, and there’s intrinsic value in a good place to live. In the long run, houses are worth much more than paper money. I think it’s best to focus on what is truly necessary in life. And I believe housing is one of the true essentials.

[JBurkett19]

If it were me, I would not invest in anything that has HOA fees. Maybe buy a small apartment building? With a small building, you will most certainly have at least a few of the untis rented at all times, plus small units (1 & 2 bed)are easier to keep rented.

I would not live in the same building as your renters. Bad idea. Even the granny flat idea isn’t a good one, unless you can rent to family.

Another alternative is to buy a small house in a decent place. Just make sure your rental income will completely cover your expenses.

I have a SFR that I’m renting and I have found out that you need to have cash reserves to properly cover unexpected expenses. If you’re cash strapped, because you don’t get enough money from rent to cover expenses with a little for maintenance, you’ll be hurting.

My monthly maintenance expenses including lawn care are about $125 per month. This includes a cushion for large expenses like H2O heaters, faucets, appliances, plumbing, etc.

I think you’re on the right track, and rates will not get lower, not to mention if we get crazy inflation over the next few years, RE is the best place to be. Your cash will be worth less in a high inflationary environment.

Never under estimate the value of a house. Everyone needs a place to live, and there’s intrinsic value in a good place to live. In the long run, houses are worth much more than paper money. I think it’s best to focus on what is truly necessary in life. And I believe housing is one of the true essentials.

[JBurkett19]

If it were me, I would not invest in anything that has HOA fees. Maybe buy a small apartment building? With a small building, you will most certainly have at least a few of the untis rented at all times, plus small units (1 & 2 bed)are easier to keep rented.

I would not live in the same building as your renters. Bad idea. Even the granny flat idea isn’t a good one, unless you can rent to family.

Another alternative is to buy a small house in a decent place. Just make sure your rental income will completely cover your expenses.

I have a SFR that I’m renting and I have found out that you need to have cash reserves to properly cover unexpected expenses. If you’re cash strapped, because you don’t get enough money from rent to cover expenses with a little for maintenance, you’ll be hurting.

My monthly maintenance expenses including lawn care are about $125 per month. This includes a cushion for large expenses like H2O heaters, faucets, appliances, plumbing, etc.

I think you’re on the right track, and rates will not get lower, not to mention if we get crazy inflation over the next few years, RE is the best place to be. Your cash will be worth less in a high inflationary environment.

Never under estimate the value of a house. Everyone needs a place to live, and there’s intrinsic value in a good place to live. In the long run, houses are worth much more than paper money. I think it’s best to focus on what is truly necessary in life. And I believe housing is one of the true essentials.

[JBurkett19]

If it were me, I would not invest in anything that has HOA fees. Maybe buy a small apartment building? With a small building, you will most certainly have at least a few of the untis rented at all times, plus small units (1 & 2 bed)are easier to keep rented.

I would not live in the same building as your renters. Bad idea. Even the granny flat idea isn’t a good one, unless you can rent to family.

Another alternative is to buy a small house in a decent place. Just make sure your rental income will completely cover your expenses.

I have a SFR that I’m renting and I have found out that you need to have cash reserves to properly cover unexpected expenses. If you’re cash strapped, because you don’t get enough money from rent to cover expenses with a little for maintenance, you’ll be hurting.

My monthly maintenance expenses including lawn care are about $125 per month. This includes a cushion for large expenses like H2O heaters, faucets, appliances, plumbing, etc.

I think you’re on the right track, and rates will not get lower, not to mention if we get crazy inflation over the next few years, RE is the best place to be. Your cash will be worth less in a high inflationary environment.

Never under estimate the value of a house. Everyone needs a place to live, and there’s intrinsic value in a good place to live. In the long run, houses are worth much more than paper money. I think it’s best to focus on what is truly necessary in life. And I believe housing is one of the true essentials.

[sdrealtor]

I’ve bought cheap condos with low HOA fees in your area and have done very well with them so far.

[sdrealtor]

I’ve bought cheap condos with low HOA fees in your area and have done very well with them so far.

[sdrealtor]

I’ve bought cheap condos with low HOA fees in your area and have done very well with them so far.

[sdrealtor]

I’ve bought cheap condos with low HOA fees in your area and have done very well with them so far.

[Author]

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