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ANyone buy Real Estate

vitor

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Im about to my 2nd property, this one is a foreclosed apt here in Maryland. I was just wondering if any of you buy property or foreclosed property, and what you do with it. THe apt is in a college town at the university of Maryland, needs some new paint, carpet and some kitchen cabinets, then it is ready to sell or I might just rent and let the renters pay off the mortage. Anyone who does this speak up, help a brother out.
 

saint808

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if you are sure there is nothing else substantially wrong with it i would fix up the cosmetics and rent it out... i own a couple places like this ... and being close to a college you can jack the rent :)
 

squarepeg

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I own a rental property in VA. Get a book on residential real estate investments, I found a good little paperback at the bookstore for $15.

Do your research to make sure that you'll be able to rent it to cover the mortgage and any renovation costs (see if you can roll the revovation costs into a 2nd trust or equity line: the interest will be deductible as an expense).

You don't need to make money off the rent (ie rent it for significantly more than your costs for the mortgage, insurance and taxes); a rent slightly above break enven for the right property is good because resumably you'll get the upside (appreciation) and you'll be able to depreciate the property to zero-out your net income. If you make less than $150k per year, I believe you can use some of the losses to off-set your regular income (but I'm not sure because we make too much to use this).

Good luck.
 

Crowler

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squarepeg said:
I own a rental property in VA. Get a book on residential real estate investments, I found a good little paperback at the bookstore for $15.

Do your research to make sure that you'll be able to rent it to cover the mortgage and any renovation costs (see if you can roll the revovation costs into a 2nd trust or equity line: the interest will be deductible as an expense).

You don't need to make money off the rent (ie rent it for significantly more than your costs for the mortgage, insurance and taxes); a rent slightly above break enven for the right property is good because resumably you'll get the upside (appreciation) and you'll be able to depreciate the property to zero-out your net income. If you make less than $150k per year, I believe you can use some of the losses to off-set your regular income (but I'm not sure because we make too much to use this).

Good luck.

IMO this is a BAD idea. DOn't get a place unless you are paying your mortg AND making a little each month.

Look at what happened in TX back 10 years ago. The house prices in some areas took a big DIVE. Look at some areas in CA it is happening now. So if you buy a place and the price goes down. Then you have a negative situation.

Back years ago when you could use passive losses it might have made sense but do NOT do this now.

It is so easy to find properties that will pay your mortg AND give you and actual profit why lose money each month.

I got my first rental property almost 20 years ago so I do have experience.

Yes if you are near a college you can make some nice money. My suggestion is get the entire semesters rent AND security deposit UPFRONT> I know it is a lot of money but it was the standard when I went to school and where I have a rental so the students are used to it.

ALSO get EACH kid's mother and fathers home address AND phone number. Even better have them sign the rental agreement and give you their bank account numbers.

This is the advantage you will have if you own a nice place that you keep nice. Kids will do anything to get into your place.

I had 2 REALLY nice girls TRASH a place I had. The $750 deposit didn't even come close to covering it. Fortunately mommy was a Dr. and daddy was an attorney. I got a nice big FAT check for over $4000.

I did the repairs and pocketed about 2 grand besides the money I made on the rental income.

If you do rent out I say Find out the eviction requirements for your state. If the rent is 3 days late start eviction. I learned the hard way do NOT give them second chances over and over. You will NOT get paid, you will get pissed and they will screw you over.

Victor I would suggest trying to find a real estate investment club in your area. It sounds intimidating but many of them are guys and woman in jeans who are VERY welcoming and VERY knowledgable.

Don't fall for the schemes you see on TV. I know a number of people who did the nothing down or actually got money at closing and are now bankrupt.

On the other hand if you are disciplined it can actually work to your advantage. Of course your credit is one of your biggest assets if it is good. So protect it.
 
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vitor

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Hmm

Thanks for all of the advice guys, what do you think the best way for me to find foreclosed homes is, I got a MD/DC/VA website I have used, and I have a connection at the court house, but i imagine everyone gets to see those, I would want the hot leads.

Any tips
 

stackdizzy

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A friend of mine pays anyone 500 bucks who can find him a foreclosed property. You might want to do this! There are many ways. I like the whole apartment complex idea. Though I would be in it to make cash. You can set it up at the bank so you just get a check in the mail or diposited in your account! I would make sure that you know general construction knowlegde or you know someone that is honest and gives you a good price becuase maitinence can kill you if you are not prepared for it! Also if you want there are places that manage real estate for you though if it a small complex I would just do it myself. Anyway Good luck dude. Also in my state if you sell your complexes everyten yeatrs you don't have to pay taxes on the sale and can use that to apply it towards a bigger complex! So just keep rolling the complex over every ten years until you have a big enough one to retire on. Which is my number 1 goal!!
 

C_Horse

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cash flow

Unless you are going to flip it, try to get 10% positive cash flow. You can't expect full occupancy forever, plus the maintenence costs should be covered. - CH
 

squarepeg

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Crowler, you have some sound advice. I did not mean to imply that Vitor should take a loss monthly with the hopes of offsetting the loss with expenses and depreciation, I was only suggesting that for the right property, a slight monthly profit above break even might work. It requires a lot of homework and risk, but if you hit it right, it can be financially rewarding.
 

tbonus

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Yes, I would say get a broker to work with you. It usually doesnt cost you a cent. In my state the commission is customarily paid by the seller. Have them look for bank repos or check HUD's website at goldenfeather.com for their repos. I've got some single family homes and some multi family. Definitely want to make some passive income. I'd say shoot for at least 25%, because if you go to finance more homes, most banks will only count 75% of your gross rental income minus expenses when underwriting your mortgage.
The rest of the advice is good. I dont have any properties in college towns so I cant help there. But I think that's a great idea about getting the whole semester upfront. Do a credit/background check if you can and at the very least get as much info about them as possible.
 

kbull

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I am a mortgage broker with a rental and I can tell you that cash flow isn't everything. I would flip this property and pocket some cash. The uglier the house is the better you can buy it and the more you can make. Also keep in mind that even on a HUD foreclosure HUD will pay a realtor their commissions, so a realtor won't cost you anything.

Flip one or two properties and put some money in the bank.... Then try renting.
 

tbonus

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I'd say that if there is a big enough profit margin, you might fix the place up and then get a new mortgage based on the new value of the property and pull the equity out. Then you dont have a capital gain and your tenants will pay your note.
 

Armageddon

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I'm working on getting into this so I can set up my future. I'm trying to figure out a way to pic up this old abandend hotel in my home town. I want to turn it into loft apartments. But it's going to be some work. The only thing I can advise is to keep acting like a sponge and absorb all the knowledge.
 

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