Posted by Ronald * Starr(in No CA) on August 29, 2003 at 24:02:43:
I’m going to try to discourage you. First, when buying your own home it is not like trying to buy a bargain property for rental or quick profit resale. You probably have more requirements in a personal home than in investment properties. You want a certain quality of neighborhood. You want certain amenties, such as a good layout. And so on. My view is that investing in bargain properties is fine, because one can always find some renters for any type of neighborhood. Or some buyers. So, when we buy bargains, we don’t worry too much about the things that you will want to consider in your own home. That is what makes bargain buying work, in my opinion, as you just never know where you are going to get your properties.
So, in summary, it is more difficult to get both a bargain buy and a property with the desired amenities.
Also, in very high cost areas, such as the Washington DC area, it may be financcially better to rent than to own. This is especially so for somebody like yourself, that does not have to worry about quality of schools, safety for a spouse and young children and so on. If you can overcome the problems of renting, I recommend it in high priced areas. The problems: not being able to redecorate as you wish–“sorry sir, your rental agreement precludes painting the bathroom black with pick and purple pokkadots.” Not having the pets you want: “Sorry sir, the bison must go.” The uncertainty of being asked to move out suddenly: “Gee, sir, when you rented from our late folks, that was fine. But now, we want to sell our inheritance, your house.”
Then, use the money you have and can borrow to buy rental properties in lower-cost areas where the cash flow will be good. Tha appreciation should be the same over the long run with low-end rental propertis as you would have had on your own purchased home in a better neighborhood.
Besides renting for an appreciable time and owning rental properties, there is also the possibility of investing in distressed properties for quick profit turnover. Do a few deals like this, even if they are in neighborhoods in which you would not live, and you can have even more money, perhaps allowing you buy where you want to buy.
Good InvestingRon Starr****