Posted by JOHN H. on July 19, 2008 at 14:06:37:
I am from the kansas city area.
be careful of many of the metro areas–some are rough.
let me know if i can help.
suburbs are pretty good.
what first? - Posted by John
Posted by John on July 15, 2008 at 21:17:05:
I am not completely new to real estate. But it has been quite some time since I have done much with it. So for the sake of this post, please assume I know nothing! I am currently living in New York City with plans of moving to Kansas City, MO with my girlfriend. She may be getting transferred there with work. I have been looking at properties there, and I see lots of bank owned, and foreclosure properties in the listings. Some for as low as $6000.00. Now I have never been there before, and know nothing about the neighborhoods or how bad these houses could possibly be, but there are lots of them under 40k. It looks like a great place to find diamonds in the rough. I am originally from Wilmington, NC and if you searched MLS there, you would be lucky to find anything under 100k, even if it needed complete rehab. My first question is: Should we buy our own home first and then improve it to create equity that we can borrow for investments, or should we buy a multi-family that we can live in and rent the remaining units to cover our mortgage. Secondly, I am quite handy with repairs, If we were to buy a house for example that was $6000.00 and it needed work, what has to be in order for us to be allowed to live there while the work is done? In other words how good does it have to be to be inhabitable by law? This may sound silly, but I have to start somewhere. Any suggestions will be helpful.
Re: what first? - Posted by Maurice
Posted by Maurice on July 16, 2008 at 07:12:18:
You seem to have some good ideas. You just need to refine them a little.
The question of what type property to buy first is up to you. Sit down and figure out what you want to happen over the next year, five years, ten years. Map out a plan of action. Figure out what you need to do, to get a good start.
I would suggest first of all that you go and look the city over. Either you or your girlfriend or preferably both of you. Even for a weekend. Go rent a car, look at some houses, drive thru the neighborhoods. Possibly make a date with a good real estate agent, look at some properties and let someone with local knowlege brief you.
I would also suggest you NOT look at fixer uppers. When prices are this low it does not pay.
You should be looking at good middle class rentals, either houses or apartments. I don’t know how much you have to invest. But my policy is to buy only with positive cash flow, or at least break even cash flow, and wait for the real estate markets to get back to normal.
If prices are down 40% right now, and you can buy with 10% down, then prices only have to go back to where they were and you make 400% on your investment. Plus cash flow, plus tax shelter, plus your mortgage paydown.
There is nothing exciting or dangerous about investing in real estate for the long pull. But it works.
Re: what first? - Posted by Bill Jacobsen
Posted by Bill Jacobsen on July 17, 2008 at 10:09:13:
I would suggest that it takes even longer than a weekend to get to know a city. I think you should take the weekend to find an apartment to rent. Only after living there at least three months would I consider buying. The reasons are that by that time you can get to know the area and you both will be established in your jobs.
What type of property is certainly your decision. I prefer living in a single-family home. But that is the most expensive way to live. A 2 to 4 unit multiplex would allow you to get a owner-occupied residential loan and pay for part or all of your mortgage. In Oregon it takes 10-20% down to cash flow.
I would also caution you about parterships with girlfriends. If either the personal or business side goes sour the other part of the relationship probably won’t survive.
Good Luck,
Bill