What to do? Where to start and how to tell it ?
I got pulled out of Mc Donalds the other morning to help a friend with a house that was SOLD. All on paper at that point . Why didnt I take some pics ????
Im just working on one of my own rentals so its not a big deal to head my tool trailer to his house instead of mine. We make a deal hourly and we both get started on it in 30 minutes after initial dickering. Hes to help me load the job with scaffolds and ladders in such which we do. So we get the job set up and ready to cornish the out side completely.
Hes done a lot of homeowner looking work already to the inside and it looks just like that . Pretty poor and the roof is bad on the back especially . None of my business, but I ask if hes going to replace it and hes not cause it passed inspection. I cut out what rotten lumber I see and that was a big deal to him. Theres some sagging which doesnt get fixed and I fit straight facier boards over the areas . I loose and 1 1/2 in the middle of some of the faciers. Over hangs are the same deal. So its doctored . Getting to be an ethical deal to me but we get through it to get it better than it was before. And Im working for his interrest for hes the one paying . Cash . House needs to be redecked and fixed but doesnt get it .
House is pretty old . Im gonna guess 45 years and really out dated. I know its got cast iron plumbing cause I worked on it . I set new fixtures and a hot water heater.
Im not bragging here but to make a point later in the post ; Any rental Ive got will blow this one away. Its that bad , not that all mine are great because they are not.
He paints the out side after painting the inside all with a roller . Cabinets included! Looks like his first time at that .
Now the meat of the story;
I ask the selling price . Selling price is 75,000 fixed. Its 1100 sg ft 3bed 1 1/2 bath w carport, ranch. Lot is situated in low medium hood. Not trashy. My hoods match or exceed it .
The closest matches Ive got are situated 2 blocks from the university. Same deal in a better hood and only 6 yrs old. Houses are very nice but not expensive. I value them as 10,000 better properties but the sq footage matches. One cost me 42,000 and the other was brought home playing keep away from a local realator for 49,000 to control the addition as it was the worst on the street at the time. If I remember dcorrectly they both appraised nearly the same at 56,000 three years ago. So not a good deal on the last one at all .
I call the RA that sold the case study here and she tells me its for real. Im blown away. She looks at those two and says they will bring 80 to 85 in 90 days quick sale. What happened to the market ? She doesnt know exactly but she only has 50 percent of the listings to work with she had one year ago. Goverment loaned 100 percent of the money in the case study. Not a dime down payment. Low interrest rate made the property affordable on a 30 yr note.
From the rules of rental 101 we need to be getting at least 1 percent rent per month to value. Thats where the glitch remains. When I aquired the two matches they got 550 per month each which was well with in market. It looks like now they need to be bringing 800 per month. Theres no way. She also agreed that rentals havent climbed any amount in a few years . Those properties are still worth 550. Possibly 600 very tops.
Ive never been in this situation before . I could cash every thing out right now or hold as they are all making money as it is . I could become the price leader as I was once before who opened the “nice 3 bedroom house ” market by myself and at the time commanded 100 dollars more rent than everyone. I remember that very well. On the phone they were much too high but if they came and looked they rented them. Still I was offering somthing extra for the money. Now when I pick up the paper there is some higher than mine but the lot of them are priced the same .
Tim
Edited 1/18/2006 10:37 am by Mooney
Replies
Rental profits should be considered interest on "bonds" that you bought in real estate. The TRUE value of real estate ownership is normally based on what the rate of return is for rentals. Everthing over/under that is based on emotion/fear.
My question to me is: Can I receive a better risk/reward ratio for another investment instrument?
Ask yourself that and research the answer.
1) Sell high, wait with liquid assets, buy lower when(if) interest rates return to normal.
2) Hold, raise monthly fees while risking that your renters can buy at that rate per month.
3) Hold at current rates with long term renters and less hassle.
4) Hold at current rates, Cash out your equity at fixed long-term rates and hold the money for future choice rental picks when interest rates go higher and house prices stabilize.
5) On and on and on....
You, and only you, have the answer for you.
I know mine.
Troy Sprout
Square, Level & Plumb Renovations
"I know mine. "
And what would that be?
Tim
Cash and equivalents, no notes. Better returns for me.
I make no decisions based on taxes, appreciation or interest rates. They make the analysis too complicated and can change in an instant.
In this market (very local), the schools are in the top 5% of the state and a BIG premium. That being said, I saw a DUMP go for tax appraisal last month. No room for profit after gutting that place.
I can't compete with emotion backed by cheap money ("NO Principle" loans come to mind) because I'm spending "out of pocket". You'd be (or may be) surprised how careful you are with your own $ in this business, but the SPEED of a cash transaction is a BIG bargaining tool.
I'll wait (or leave the business) if I need to.
These are, of course, personal decisions. Troy Sprout
Square, Level & Plumb Renovations
Three different peoples' opinions = three different opinions.
Imagine that.Troy Sprout
Square, Level & Plumb Renovations
"
Three different peoples' opinions = three different opinions."
Yup.
I spent a couple of hours this afternoon with my main RA . She spoke directly at me for a while . She also priced the property that I have she knew about which is several. She doesnt have knowledge of it all cause shes my new lady after the old one retired and moved. Ill probably call her too as shes a personal friend.
Some one here said in this thread they dont ever buy on these reasons. Good practice normally. In the 70s there was an author and speaker that taught just buy and hold on for it doesnt matter what price. He was right in that era for inflation was getting it done . But by the time the 80s hit people following that advice went busted. Sometime during that time in the 80s we saw 18 percent prime rates.
Tim
Tim - Property appreciation can be substantial, and can be enticing. Up until a couple years ago, I owned four in NY. One was a gut renovation (1 bedroom teardown bungalow), never a question it was going to be sold. When I started, I couldn't get 100K for it. When I finished, it was over 250K. Same one now, 3 years later, probably 325-350. I'm glad I sold. That money helped make my life better for a while.
Second one I sold was my office, a converted house. I moved the money south (under a 1031) into other properties. I nearly quadrupled my money on that one. If I still owned it, it would llikely not be rented for as much as I'm getting down south. More importantly, I wanted out. #3 is vacant lot and #4 is the house I'm redoing now, but for rental, not resale.
You don't need to sell everything. You don't say how many you own totally, but sell a third, or half and use/enjoy the money. (Watch the income taxes.) Keep the best for yourself. Do you really enjoy the rental business? I know sometimes, you've seemed a bit unhappy. does it stop you from enjoying your life - (missed Laurel because of it, right?) is that what you want? Get some cash and take the wife on a cruise or whatever. I had a thread in the Tavern last week after I came back from a funeral of a buddy - How much is enough? This guy had millions - all in real estate - and he died at 48. Why? I swear it was the stress of worrying about the crap.
Second point - capture some profits. it doesn't always go up. I sat thru the market collapse in '88 and wound up paying three years taxes and mortgage before I could move on.
My 2 cents.
Don K.
that one really got me thinking. I have 3 rentals, 4 lots , all paid for. only thing is im driving a 800 dollar truck with no radio. i could sell one and live a little but i might have to pay taxes. by me the property is going up 20 percent a year and im just trying to hang on. but then again what if i died next year. not planing on it im 52 but you never know. never thought id be a millonare but then does that mean anything anymore?
Tim,
I don't get the issue. I make my decisions based on what my plans are. Not what situations might get better or worse that I can't control. Want to be more cash heavy? Then sell a few while the market is hot and make some money. Don't care about the wind fall? Don't sell and the market will level off in time.
You of all people know this stuff is cylical. And that we don't control that part of it. We make our plan and soldier through it and adjust as the market does. So the original question I have is.....what are your plans? Once you get that down act accordingly.
I had one that I planned to sell later this year and split up a partnership that I have had with my brother. We had already agreed on the terms. A friend of mine asked if I would look at some property he was looking at and mine was better at the same price, which was the price I was hoping to get. Wasn't ready to sell quite yet but the it fit my plans, just a little early, it should close by the end of the month.
Even though the market dictates what we can sell at (to a point) we should, like in any other business, know what our numbers are and what would be a good time to get out. Is your time here? Only you know. DanT
Thanks Dan.
I pretty much answered your post in the one I addressed to Don.
"what are your plans? "
We did this for the long haul and we said we would never sell them because we wanted the retirement income. Well, semi retirement anyway. We wanted to retire with 20 units so We ve got a ways to go.
The probem right now as I see it is retreiving the one percent in rent to value not what they are worth. Right now as it stands Im a couple hundred off per month. Ive been at this for a while and I saw the days of higher interrest. People choke down on buying and property prices stabilize. When that happens people also dont qualify for loans thus the rent market picks up. Its a sellers market right now and that causes the values to climb but I believe they will hold. No one knows where it will stop and this may be just the start of it . When the 100 percent loans fail in abundance will be the buyers market but with a high cost in interrest. One or the other seems to get the consumer as right now people are paying premiums in values to qualify for interrest rates. A vicious circle. Used to when I bought the property could be had cheap at auction but it was hard to hold on to with interrest rates @ 10 percent.
Ill hold my hand and pass on selling.
Tim
Bobby -
On the level of getting something from the property to make your life happier, give that some thought. The extra money from the sale of one can make a big difference, maybe for a few years, and all too often having a big estate to me means somebody else buys a bigger headstone for your grave to make sure you don't come back up. I know some people (especially real old timers) deny themselves nearly everything. My Dad did that. I told him he wasn't getting to heaven any faster just because he denied himself pleasure on earth. I'm no spendthrift, but after I sold the building and paid off what needed to be paid, I had $ in the bank for a few years. Some of it went to working capital for other projects, and having that was nice too. If you are driving an $800 truck, sounds like you can be frugal too.
As far as being a millionaire? Is that important to you? Ask yourself why? Do people call you a millionaire and respect you more? Probably not. they probably call you a cheapskate because you won't even get yourself a new truck! LOL. In my case, it doesn't mean much either way. I know who I am, whether I have a million dollars or a buck seventy. I feel the same way about the people I know - I don't care how much money they have or don't have. If I like them, I like who they are. Some people get very dislikable because they have money. BTW, If you convert the asset to cash, your balance sheet is still the same (less taxes) and you are still a millionaire - until you spend it! <G> Keep in mind, money is not a collectible.
Taxes can be a problem. More than one way to skin a cat though. If the property is a long term asset, the IRS gets around 20% as a long term capital gain. State tax is added on top. 20% isn't bad, income taxes are often higher. Remember they only tax the profit - sale price less the cost of purchase and repairs, unless you depreciated it. Sometimes the 1031 rollover helps, if you want to stay in real estate. If not, you might be able to structure the deal with an extended payout and get your tax bill over time. Talk to a good accountant (CPA if possible) about that. If you sell your home and have lived there a couple years, that's tax free. If taxes are really the deal breaker, then take some money out as a loan against the property and let the property pay the mortgage every month. Then you still own it and have a couple bucks too. A word of warning - many banks try to sell reverse mortgages. The big problem with them is that the expenses and fees are horrible - typically 10%, sometimes more.
Good luck with your efforts. (Glad I made somebody think.)
Don K.
EJG Homes Renovations - New Construction - Rentals
Every day you drive a paid for truck you are making money."All men's miseries derive from not being able to sit in a quiet room alone." Pascal
Great discussion, folks. I got a decision I have to make soon about a rental house I own that I need help with.Here's the deal:My girlfreind's and the next door neighbor shared an easement driveway which went b/w the two houses to an asphalt pad in the backyard. No garage at the neighbor's house and a dangerously decrepit 2-car in GF's back yard. In May of 2004, Neighbor gets a new job out of state and wants to sell. I offer to buy the house from him so that GF and I can control the easement drive, replace it, build her a new 2-car garage and me a new 1-car garage. Neighbor sells to me at a fair price ($87000). At the time, I had NO MONEY but excellent credit and bought the house with a no-money-down program through Countrywide that gave me an 80% LTV mortgage (5 year ARM) and a 20% LTV HELOC. I figure I'll move in, live there as a primary residence for 3-5 years, build the garage and sell before the ARM adjusts.Fast forward 2 months to July 2004. GF and I were out having some drinks one Friday night and decide that now that we'd been together 5 years, owned 2 houses next to each other, and weren't getting younger, we might as well get married. And we did. So by August 2004, I was living with Wifey and had rented the next door house to some very close freinds.My mortgage payment is around $500. My HELOC minimum (no principal) is $100. The tenants pay $750/mo. I gave them a deal b/c they are freinds and have given me absolutely no trouble ever. We have dinner together once a week or so. Being that the tenants are next door, it's important that they're the right tenants. So getting closer to my dillemma: I pay $500 on the mortgage and $250 on the HELOC and haven't had any real expenses to deal with, besides buying new blinds appliances when I bought the house (now depreciating).So, tax-wise since what I owe so much on the house, it's really a net money loser. However, our neighborhood values are heating up real nice.Fast forward to last fall. The city has offered up a grant program to my neighborhood which will match owners' money for exterior home improvements. (Long story) Sparing as many details as I can, a rental owner can get a 1:1 match (up to $15,000) on the condition that they sell their rental property within 18 months of completing the work.So this is essentially a 50% off coupon for up to $30,000 in work I want to do to the house. Hard to turn down.I have two problems: Emotional and Financial.Emotional: Wifey and I are probably going to be in our house for another 3-5 years. We love our tenant/neighbors and would hate to risk living next to someone we don't like. I have already discussed with the tenants this grant program and that if I signed up for it, I'd have to sell their house. I have offered them first refusal and I'd be willing to give them a good (buddy) price. They are interested, but the truth is I don't know if they'd be able to qualify to buy the house. They are both somewhat young and may (or may not) be hesitant to get locked in to our town.
Do I commit to this program for the free money and risk losing my great tenants and having to share a driveway with some crappy neighbors?Financial: The work that I'd do for the grant will cost a total of $25000, which would cost me $12500 out of pocket. I currently owe a total of $83,000 on the house and have the financing in place for the required 12500. So after work was complete, I'd be into the house for $96,000 or so. Based on comps in my area, I feel my house would sell for $120k-$130k. If I do this grant program, I would offer it to my tenants for $120 and feel pretty good walking away with 20k (for no money down on my part). Or, I could give them the boot, remodel the kitchen ($7000) and the bathroom ($3000) and then sell the house easy for 140k-150k. If I did not do the program, I'd build the garage and driveway anyway, keep my existing tenants, and use their garage for my workshop.
Financially, if this house gets me $750/mo today, I'm making little to no money on it as is, and it really wouldn't get much more than $850 on the market (its a small house), AND my ARM comes up in summer 2008, then what should I do? Take the free money, fix the house, sell it, and buy another rental? Ditch the free money and just keep my tenants and not worry about it? I assume the RE bubble will burst or deflate eventually, and we're already seeing a softer market here in Kansas City, but I can't see that property values around here will decrease, just level off.Any suggestions?
Thanks for your patience, this one ended up way longer than I'd hoped.
Edited 1/19/2006 6:56 pm by rasher
I think you know what you gonna have to do on that one but the lure of the "free Money" is causing you to second guess yourself.
There ain't no free lunch.
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal
If you can fix it and sell it for a net of 30-50k I would do so. Not many oppurtunities for that. The nice tennants? sorry it's a business. DanT
Is there anyway to both do the remodel and get the upper range price.
Perhaps the curent renter would be interested in sweat equity.
Sometimes it is hard to find the dividing line between friends and business. I think a discussion with your renters on a $140,000.00 sales price woud be appropiate and understood, with the offer of sweat equity.
Considering a $20,000.00 sacrifice for friendship makes me think you would make a great friend. But, we all understand the realities of life, and the need to take care of business, which in turn takes care of your family.
I would invite them to dinner and discuss the possibilites as you have presented here.
Othersiwse:
Perhaps you have read my practise: that real estate, even in a breakeven on PITI is "typically" a good long term investment.
How about an under-the-table deal where the existing friends / tenants buy it from you for an agreed upon one year, then you buy it back from them. Any chance of that ?
Greg
Good story.
It started out as a tax shelter and looking down the road to retirement . I had started flipping houses in the real sense of remodeling them. We started out selling our "home". Things went so well I sold 4 homes out from under us in 6 months. DW said enough is enough. She quit me . So I started buying starter homes at auction. All I remember was the taxes we had to come up with that year from those sales. She said that was enuff! So we started keeping some of them and came the rentals. We bought one every year as a project after that. We got enough it became viable and became more than a part time job. We have 19 properties now. I never was able to put much money in any of them but I put in a lot of time . I probably dont have over 5,000 of my own money in any of them. I would save up that money and buy one then fix it . Move to the next one . Some properties are vaccant land that the rentals paid for in payments. We paid for one piece of land out of our pockets as it was recreational. I guess its just been somthing that we do often working the weekends on somthing . Way of life more than anything .
I heard a story one time about a cattle farmer that looked too young to have a farm and was asked about it . One Christmas his Dad gave him a new born bull calf. When they got back from the barn looking at his present his Mother had his future Mama cow in a cardboard box in front of the tree. His Dad said you wanted a cattle herd one day and there it is , take care of it .
We talked until 1:30 this morning and agreed on a decision. We will keep the herd cause thats how its been . We didnt have any thing when it started but 3,000 for the first one and a lot of work. What would we do the weekends if we sold them? <G>
We both told stories about how we both had screwed up and bought this one or that one . Most of the time we felt that we had given too much money because of feelings we felt for the properties . Those feeings were later transpired in renters that had to live in them after seeing them so I think it is about feelings.
Tim
tim what a timely post for me.i've been doing rentals since 1977,i'm now 50 and it's what puts food on the table.i read your posts on all the rental subjects because your thoughts are about the same as mine,i own rentals to make money,period.that 1% rule got closer to 1.5 in the 80's[the good ole days]if they appreciate great,thats the bounus. any way i'm as confussed as you,heres where i'm at. tell me what you think,today i look at a.brick 6 plex rents total 50k a year,less 5,000 vacancy,5000 maintance[all done by me]taxes 6000. ins 3000,water 2500,trash 1200..so if everything goes right net 27,k per year. now these are nice units in a really good part of town,but have been neglacted and i figure 7500 per unit,new kit cabs,new baths, all carpet and floor covering.asking 475k i tell the r a i'd look at 350. thats 6.8% on 400k.he laughs me out of the place,tells me it would take 425-450 to buy.thats 500k with improvements = 5.5%. i'm like to hell with it i'll just sit at home and watch ophra and phill! how would this look in your neck of the woods?around here the basic trend has been values have went up, rents have been level even went down some in the last 4 yrs,due to boeing/911.hand me the chainsaw, i need to trim the casing just a hair.
Not sure where you are, but I own an 8 unit building in Paterson, NJ.Want to get rid of it because I'm getting no income, but could make money on the appreciation. Just too many prodlems with this one.But we also have the same problem of prices going way up, but not the rents. What people want for places I wouldn't want to live in, I wouldn't make a dime even if I had no mortgage. Maybe I'm just not hooked in with the right people.Maybe I just don't know enough yet.
Maybe it's just cause you're in Joisey.
Not much avail here for a good price.
I am surprised no one has asked about the bigger picture:
Where are these properties?
What is going on around them, even if growth is still 20 - 40 miles away?
Are there some indications that big city expansion and growth will come like a wave in the future?
What is the closest large city, how many miles away is the nearest large city?
Is there potential for comuters, choosing to live outside a large metro area, to locate in or near the area of your properties now or in the future?
I have some experience with this, seeing Houston, which is 50 miles away, expand into Fort Bend County, the adjacent county to Harris County / Houston. Fort Bend has been one of the top ten fastest growing counties in the nation and now the expansion is knocking on our door (Wharton County). Many people want to get away from big city sprawl and lots of office space and commercail development is going up in the burbs.
Farm and cattle land in Fort Bend County, which was $4,500.00- $6,000.00 an acre have been developed into 1 1/2 to 2 acre estate lots selling for $75,000.00 - $180,000.00. This movement has drastically increased real estate values in all markets.
Memphis expansion and urban retreat drove people east to Germantown, Tennesse and drove prices sky high. Now, the next country town, Collierville, 10 - 15 miles from Germantown is booming. Germantown and Collierville were both small country towns in the 70s. Now they look like upper middle class American suburbia, with real estate prices to match.
When I return for a family visit, there are areas that were once coutry lanes that are so full of growth and developement that I am shocked. to lane roads thru the woods have become 6 lanes and a turning lane with commercail development on both sides. Areas once heavily wooded, grazing cattle or growing cotton are now subdivisions.
Seven or eight years ago a 20 acre potential commercial tract on the main street thru Wharton, Texas was $4,000.00 an acre. Now one to two acre parcel on the same street are selling for $100,000.00, and the growth has only just begun.
Again, if I can break even on PITI with my rental payments, I hold real estate.
>>>>break even on PITI with my rental payments, I hold real estate.<<<<<<<<<
Not a bad thing to do, in most cases.
Heck, people live in Columbus and work in Houston nowdays.
Look at the cost of stuff around Round Top and the rest of Washington county.
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal
Where are these properties?
They are scattered all over town as they are 3 bedroom houses mostly. Ive got two 4s and one 2 bedroom.
Three are in the country and one is across the river in a smaller town.
Ive got building lots scattered too. No commercial.
Walmart and Tysons foods is causing this boom for us . We were featured in Money mag over it . Forbes too. Id tell more but its boring.
Tim
Growth in the area from Tyson and WalMart?
Sounds like these properties are worth holding, as I practise....a breakeven on PITI is typically a good real estate investment. But, most can and do produce postive cash flow, expeicially if they are in decent condition.
Properties in the "country"?
Country properties are (in real and actual personal experience) are subject to the greatest appreciation in growing areas. Lots in growing and moving areas can easily triple or quaduraple when exisitng homes are sucked up by growth.
Edited 1/20/2006 10:38 am ET by txlandlord
And it's getting increasingly easier for tenants to find houses to buy for the same as rent rates with all the government assistance on down payments, rates, grants, etc.
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal
Therein lies the profit... later.
If someone gets something for "free", or in this case, "no $ down", they ain't likely to keep it up. It's like they're driving a rental car. No real loss if they wear it out.
They probably don't worry about maintenance. Hell, honestly, they can't afford to hire someone who does thorough repairs.
They lose a job and get in arrears. If they leave the mortgage company holding the now beaten up property, they've really not lost anything.
Enough of those on the market and you have some real prospects for remaking a home and turning a profit. Remember the late '80's? Lotsa markets killled, ready for redo.
But that's later.
I'll wait.Troy Sprout
Square, Level & Plumb Renovations
I sold RE in the early '80's. Man, what a blast. High interest rates. People would buy today because the were afraid the rates would jump tomorrow. Almost any price was ok.
Then the crash.
Got some great deals when that happened. My mistake was in selling for a decent profit and not just keeping them.
You are exactly right about what is going to happen to a lot of these houses bought with nothing down. The only thing I object to is that my taxes are financing a lot of those no money down programs.
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal
I take it you have single family houses as rentals.
Are the neighborhoods getting better or worse?
If better, hold to re-sell down the road as a starter home etc (not as a rental prop).
If worse, consider cashing out, but depends on your relationship w/ tenants.
Problem is that right now, investment buying is tough. Around here, not many props out there that can generate enough rent to cover mort, taxes, and ins, much less a profit.
Ive got three Id like to cash out before I even knew the new pricing .
Two are in low hoods that might get worse but are money makers still the same. Its a blue collar hood with lots of kids. Im 100 off prime rent because of it . Its not a quiet hood at night .
The other one is a nice home thats out of the local school system and in one thats not well thought of at all. Still stands nice to people who want a nice home in the country with out kids. Rents to mostly professional people in transition. Ive had three professors in a row in it . Just quiet laid back people that stay a couple of years and move on to better job opportunities. They wont let them gain tennure and keep their pay minimum. 85 percent of the callers turn it down because of the school system.. It does have a lot of parking however , enough for an 18 wheeler but to date its never rented to a trucker.
Your last statement holds true here . If you get out of the rental business you dont get back in. Prices are now to high to make those deals work. I have approval on an apartment complex and the property to build new units and have had a building permit for a year now . I wont do it unless somthing breaks . Same rules apply. Building costs are too high for the going rents for a profit.
Some folks figgure it differently than I do. They buy a duplex at retail and expect any solid return for appreciation with no low over head such as new units . In other words , they are holders of rental property. They wait for increases in value much like stocks and dont depend on monthly profits. Professional people do it for tax write offs where they primary income is excessive.
Tim
If you sell your rentals and plan to buy more you would benefit from the IRS "1031 exchange". I believe the value of the new property must be equal to or higher than that which you sold. Also, there is a deadline to "identify" (45 days) the new property and a second deadline to close (six months). Around here title companies handle the process for a fee of $500.Good luck!.++++++++++++++++
-Do the thing you fear and the death of fear is certain-
I may be too simple, and I certainly do not discount the views and suggested analysis in this thread, but I keep it simple.
I do not need rental income, and look to real estate as a long term investment. I currently own 10 rental properties and a 100 acre parcel that has trippled in value since purchase 6 years ago.
My analysis of rental propery is to be able to pay PITI with some degree of positive cash flow. In looking at it as long term investment, I consider a break even property as a good long term investment. Appreciation and the buy down process (financed by my renters) gives me comfortable collateral for additional purchases, without risking personal finances. I try to do short term loans 10-15 years, and never pay cash. Why pay cash when I can get 5.25 - 5.75 % on real estate purchases and make 11 - 15 %+ on cash invested elsewhere?
I am a builder and in regard to real estae investments and other investments, somewhat self taught. I am sure there are pros who could / perhaps will shoot holes through my approach but so far it is working.
Mooney,
I know Jack about real estate and rentals, but. . .
I do know about decisions. You decided to cash out three before you got hit in the emotions. Research the benefits to you about those three and make your decision.
About the rest. WAIT.
Wait until your emotions get over the slam. They just aren't going to be making any more land any time in the foreseeable future. There is no urgent reason to decide now. Wait a month, maybe you'll want to wait some more at that time. Maybe not.
Talk to your city planners and see what they have in mind for the near and long term future of your areas.
SamT
Yall are amazing .
Yall see emotions in me over this ,.. hum.
Never gave it a thought but yall are right I guess . This is a pretty big deal for me and the missus. In another way its like hitting a small lotery. Xs the properties we have this is pretty BIG news. I think thats part of the emotions.
Nother part of it is that I normally think Ive got my own business figgured out and this was a big curve ball. Caught me flat footed so to speak.
Then the reason I started the thread . I dont know how I can get this in perspective.
Tim
I know one thing for sure.
I regret those properties I didn't buy much more than any that I bought.
I also regret that I sold the ones I did.
With real estate I now follow the old rule, "Buy and never sell".
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal
I think we all have those stories of properties that went by by.
Sucks dont it ?
Tim
I'd cry myself to sleep at night if I thought about it enough.
<g>
"All men's miseries derive from not being able to sit in a quiet room alone." Pascal