I am 57 years old, a complete and utter novice to real estate investing. I have some savings and I am exceptionally creditworthy. I want to invest in real estate, so that I can retire comfortably. I need to do so wisely, because I can’t afford to lose my investment.
I previously held a salesperson’s licence in HI, and I previously held a Broker’s licence in IL. But, I know very little about real estate investing, and I am just beginning to educate myself on the subject. I plan to attend the next local real estate investment club meeting.
I work a full-time job, so I don’t have time to find and/or call 100s of homeowners to find one that’s willing to sell at below-market value. I don’t know the first thing about rehabbing, but I have a close friend who does this for a living. If I bought a property that needed rehabbing, I would probably hire him to do the work. I don’t know the first thing about finding/buying foreclosures.
I am meeting with a realtor tomorrow to look at buying my first home. I’m looking at 2 and 3 bdrm townhomes and I’m planning on using conventional financing. (I can see you all cringing right now.) In the book, I’m currently reading “How to Invest in Real Estate” by Eldrid, he suggests starting out by purchasing a multi-unit property, living in one unit, and renting the other(s). He also suggests leverging the loan to the extent possible (taking out a 3% loan) to take advantage of the lower owner-occupant financing rates and tax benefits when selling. I had planned to put 20% down to avoid PMI. (more cringing?) After a year, move and repeat the process to build a portfolio.
So, I don’t know if I should abandon the idea of looking for a townhome for myself or look for a multi-unit property or what??? Should I buy a home for myself, and then look for an investment property? Any ideas and/or suggestions you could offer would be invaluable and greatly appreciated.
Since your meeting a realtor anyway - have them show you some multi family property in addition to the townhome. Once you have a chance to see both, it will be easier to decide what to do.
Hi Aristotle and AmotoXracer, thank you both for taking the time to respond to my embarrassingly naive questions. @ Aristotle I’ve PMd you. I’m off to look at properties. TTYL.
I just saw a 3b / 1-1/2b bank-owned townhome listed at $64,900. The kitchen and bathroom need to be redone. It needs a new window in the living room, appliances and a paint job. I’m considering offering $50,000 and getting an FHA 208K loan to include the cost of renovation with 3% down. My realtor is getting the comps for me. It was orginally listed at $99,990. After renovations, I’m thinking of living there and then renting it out down the road. Is this a good deal? A good strategy? Any comments would be very greatly appreciated.
Theres certainly nothing wrong with your plans, especially since you need to incorporate your own housing needs into your plan.
The best thing anyone can do for themselves when starting out is to look at alot of property, dont just buy the first one your realtor shows you. If you have already looked at a dozen or so, and you like this particular townhome the best, then I would say write the offer. Also, you should verify there are no community rules that prevent you from using it as a rental later down the line.
Thank you AmotoXracer … those are excellent suggestions! I had a little trouble sleeping last night thinking about all of this. It’s a little scary and mostly exciting at the same time. My realtor and I discussed renting yesterday, both of us were assuming that they are allowed. But, certainly, we have to confirm that, because that would most definitely be a deal breaker!
A rule I’ve followed now for some years: If I might have to later prove any agreement or other guy’s statement I make sure I have it in writing, or today get it in an email from him/her.
Law in all 50 now is basically that anything said by email or fax is “good as written” and later easily proven as having come from other guy. I’ve relied on email to prove up any number of agreements, so far haven’t found it necessary to take email to court after letting other guy know I HAVE it as he & his lawyer have apparently understood I could have done so.
Fax is equally provable, evidence-wise.
Uniform Electronic Transmissions (or Transactions, I forget which, called UETA) Act has now been enacted in all states in some version, one of the quickest Unif Acts to be adopted by the various states…guess it was far too needed to ignore so most states’ legislatures jumped aboard quickly.
What did the agent’s comps show? It may or may not be a decent deal. If it’s on MLS, and no one has snatched it up, chances are it is not a good deal. The list price, former list price, tax assessment, former sales price, etc are not the current value. You need to see recent sales of similar units and know what the condition of those in order to determine the value of your proposed unit.
Hi Natalie! Thank you for responding to my post. My realtor emailed me this morning to ask me if I’d reviewed the comps. I informed him that I hadn’t received the comps. Not sure what the problem is, so I’m still waiting to get his comps from the MLS. I tried researching on my own on Zillow. (I’m not sure how accurate Zillow is.) From Zillow, it doesn’t seem that there are very many recent sales (last 6 months) in this subdivision. The one I found that was closest in number of bedrooms/baths, square footage was recently sold for $86,000. There was another one that is lender owned (same as the one I’m considering) that was recently sold for $64,000. Two more that sold for $87,550. I think that part of the reason that this particular property hasn’t sold is that the kitchen needs to be rehabbed and it’s a 3b/1-1/2b. Both bathrooms are very small. These are issues that, if I buy, I would address with my contractor if affordable – rolling the cost of rehab into the $203K loan. I have my contractor tentatively scheduled to look at the property next Saturday to give me an estimate and to see if what I’d like to do is possible and affordable. And, as AmotoXracer pointed out, I also need to confirm that rentals are allowed in this subdivision. If not, this would be a dealbreaker.
The property I was interested in went under contract yesterday, so the search continues … Thank you again to all those who offered their opinions and advice.
