About investing... Cheap houses?

leadsupplier

leadsupplier

New member
Aug 11, 2009
1,449
11
0
After reading the thread on silver I decided to make this. I have more money than I have ever had in my life right now, don't worry it's not that much. But it's sitting in the bank right now. It's also burning a whole in my pocket. I figure I have this money, I should invest it instead of buying a used BMW since I already have a running car.

I am tempted to buy silver bullion, I was thinking like 2 of them, but i have a feeling the price is going to drop, and that would hurt.

So then i thought about real estate which leads me to this post. I've always wanted to own properties, and recently I've been checking out some local homes.

There are some dirt cheap places around here. Like 16-25k for 3br+. The thing is .. I don't know shit about real estate. But what I do know is that these houses are cheap, after searching craigslist in my area for the wanted section, I found numerous pol looking for places to live for like 500-600 plus utilities.

Now here's my thinking, buy house for 20k mortars is like 300 or less per month, I rent it for 600 a month, house pays for itself and I profit $300 per month?

I'd like to hear from someone with experience in this area, bc it just doesn't seem to add up. Granted some houses need some TLC, but from the pictures the ones. I mentioned Do not seem horrific
 


Plan on another $20-30k in repairs/upgrades for houses that cheap. That does seem like a ridiculously low price though.
 
make sure these houses don't have liens on them. They might have back taxes that you would need to pay, they might have liens from contractors, or anyone else that might have done work on the house that didn't get paid by the previous owner, etc. A thorough title search company can help with this.

Also, being a landlord can be a total pain in the ass, but if it's something close to you, it is easier. Put together a rock solid lease contract, do your due diligence when looking for tenants ( credit checks, security deposits, reference checks, etc.) and don't let them slide on those. Get good solid tenants - they will suck you dry if you get bad ones.
If they are late with rent, hit them with late charge as described in your lease. If they are still late after a certain time, hit them with a Notice to Pay Rent or Quit

Find a good forum for landlords ( The Landlord Protection Agency &reg ~ Free Rental Forms, Credit Reports, Landlord Tenant Law, Lease Agreement, Rental Agreement, Eviction notice, Rental Application, landlord q&a forum, landlord advice, For Rent Ads )
there's a ton of good advice in there.

don't get soft on your tenants, they will give you every sob story in the book. don't fall for it, or you will have a hard time getting them out. Tenants have a lot more rights than landlords and the clever tenants will know how to game you.
 
medicalhumor said:
make sure these houses don't have liens on them. They might have back taxes that you would need to pay, they might have liens from contractors, or anyone else that might have done work on the house that didn't get paid by the previous owner, etc. A thorough title search company can help with this.
Click to expand...

Um, you always do a title search when you buy a house. Even when are just starting to think about it on cheaper houses. Sale contract will always state it must be covered by the seller if any liens are to come up AFTER the sale.
 
evasive said:
All the headache for an extra $10/day?
Click to expand...

It would probably be more than that. But unlike affiliate marketing I would have a valuable asset.I might make 10 a day but in 5 or 10 years the price of the house could also double or more
 
BigWill said:
Um, you always do a title search when you buy a house. Even when are just starting to think about it on cheaper houses. Sale contract will always state it must be covered by the seller if any liens are to come up AFTER the sale.
Click to expand...
yeah, title search is done, but they won't always reveal contractor liens, etc. and while a normal sale may have liens covered by the seller, buying a foreclosure won't. The banks are selling without contingencies. You pretty much buy it as is.
 
leadsupplier said:
... I've been checking out some local homes.

There are some dirt cheap places around here. Like 16-25k for 3br+.
Click to expand...

A 3br house for 16K?

This has to be on a picturesque hilltop in Afghanistan.

amirite?

I'm guessing your sitting on about 10K. Keep half of it in cash. You wanna fuck around with metals, Silver is about as good as any.
 
Friend of mine did this, but he's a handy person. He has around 30 or so now. I don't think he's paid more than 20k for any of them, but our housing costs aren't like downtown chicago. He buys them dirt cheap, needing repairs, fixes them up and rents them section 8. They're not fancy or big, but decent solid houses. He gets decent renters and hasn't had any problems with people trashing the places and he always gets paid. But, he's got the skills to fix them and to interact with the people.
 
Assuming that this 16k-25k house isn't a few cinder blocks with a car hood placed over them as a roof....

What are the chances of getting shot when going to your property? What are the neighborhoods like?

Yeah, maybe the price of the house will double in a few years, but I bet you'll have to put at least that much into it in repairs. Not to mention, you'll spend at least a couple grand before you even sign the paperwork to get it inspected, title searched, title insurance.

Sounds like you might be biting off a little more than you can chew. I'd try to find someone locally that owns property as an investment. Learn some shit for a little while and then go looking for properties.
 
Why enter a new career/industry when you're making money at what you're doing now?

It has been proven (I'll search for the proof) that earnings are consistently greater in the securities markets over real estate markets for a given time frame. I believe either Tim Ferriss or Ramit Sethi proved that it is better to pay $3500 a month in rent and have your money in the market rather than purchase a home and hope that it goes up in value.

With that being said, there are a few other metrics to look at before investing any of your money. If you have a family, are you covered with health and life insurance? Are all of your current debts paid off? Do you have a comfortable 3-6 months worth of expenses saved up in your savings account? Do you expect any big purchases in the next 5 years (wedding, college, car, vacation, home renovation, etc)? You'll want to have all of these bases covered to ensure your safety. Real estate comes with no guarantees and you'll want something to fall back on.

I'd suggest maxing out your tax-free/deductible investment options. IRA's, Roth's, SEP plans, and some bonds and lifestyle funds can save you a ton in what you'd be paying for taxes.

I guess all I'm trying to say is there are a ton of options to invest your money. Don't just jump on real estate without seeing what else is around.
 
If a contractor's lien is not properly filed and the property is sold, the contractor is pretty much fucked.

When you buy a house you take out two title insurance policies, a owners policy which covers you buying the property and a loan policy which covers the lender.

So if everything is done properly, you're insured against any defects on title.
 
You must log in or register to reply here.
Top Bottom