TheRichSolutionsBlog

i’m looking to get into the real estate business. Not as a flipper but looking for properties that can be turned into duplexes (acording to local zoning) then rented and held for long periods of time. i want to start in my community, but i live in a very very poor city, maybe the poorest city in the us. (median income is $24,000) their is a university thats a long standing institution, but its hard to find real estate around it and the students generally live at home (its a local university, very small) my question is:
1. should i buy a property in a poor city or go looking elsewhere?
2.are poor areas good investments (the majority of the city is poor, good areas have anti-renting zoning)?
3. will i have trouble finding renters?
4.and will they pay?
any advice is greatly appreciated, i’m really new to real estate. thanks

I think you already know the answer to your question. Houses in poor neighborhoods are less money but the people who live there have less income. It all comes down to how much you are willing to gamble with your investment money. If it was a simple decision or a guaranteed money maker then every one would be buying in those neighborhoods.

How much of an increase will my home owners insurance be to insure an investment property verses a primary residence? Thanks.

Your insurance may actually be less as an investment rental property than a primary residence. The big difference is that as a rental you typically need little if any personal property coverage — the tenant should be covering their property under a renter’s policy.

Regardless of the terms of the lease, don’t let the insurance agent tell you that you don’t need liability coverage. If there’s a slip and fall or other incidence at the property, typically the injured person will look to the owner of the house.

My family and another family share joint ownership of two apartment fourplexes. Both properties have recently been paid off. Now we want to split ownership so that one family owns one fourplex and one family owns the other fourplex. However, the fourplexes were bought at different times and have unequal property tax rates. How can this division be done fairly for both parties involved?
Edit (correction): The properties don’t have unequal property tax rates. Rather, the properties have unequal property tax assessed values.

I presume you are talking about property in the State of California, which is subject to the Prop. 13 rules. The value of the properties has nothing to do with its assessed value for real property taxes. If both properties are in the same city and the same county, you can approach the county assessor, asking if he would be willing to equalize the assessments, since there is really no change of ownership, just a change of vesting. But there is nothing in the law that says he has to do so. In fact he can take the position that you are actually selling one half of one fourplex and buying a half in the other fourplex and the other family is on the opposite end of the transaction on both properties. In that case the assessment on both properties will increase.

Update Edit: If the 2 properties have different tax rates then it is a dead issue and you cannot change the assessments. But as you said they are both the same (say the fourplexes are close to each other, in the same city, school district, etc., etc.) then I would contact the county assessor and he can tell you definitively what is and what is not possible under state law. The difference in assessed values are caused by the differences in property values as of the date of aquisition (say you bought the first one for $60,000, but a few years later paid $120,000 for the identical model), which forms the basis for the Base Value Assessment under Prop. 13, which then can be increased a maximum of 2% per year for inflation (if applicable). Good luck.

P.s. I am going to approach our county assessor with this query and see what he would do.

I am buying another home and making it my primary residence. I am planning to rent out my current primary residence, on which I have mortgage, thereby making it an investment property. Does that invalidate the mortgage terms because the mortgage was issued with the condition that the property be used as a primary residence. Do I have to necessarily refinance it by classifying it now as an investment property?

Thanks in advance for any help.

Yes, if that is a term of your contract, and it is there when they give you a lower interest rate, you must refinance it as an investment before you can legally rent it out.

Considering interest rates and new launch of HDB estates and condos across Singapore, is it right time to do property investment?

Investment - Consider your risk profile and then talk to a professional financial adviser. Don’t expect Y!A to provide ‘investment’ advice.
Singapore property is one of the most expensive property and any mistake would have very bad consequences.

I have a list of properties cheap located in different parts of the country. They are potential for cash increase turnaround. I have hot listings but i have no funds or i have less any financier or lender or part joiner is eagerly anticipated. The properpities are hot and viable for cash increase after purchase.

Yeah yeah … central Birmingham perhaps ???

Fact is, there is an absolute towering PYRAMID of buy-to-let Landlords who are hanging on by the skin of their teeth .. the first 0.5% increase on the base rate (most likley within a few weeks of the election) will see the first cracks appearing and by the end of this year with (I’m going to guess) BoE @ over 2% (and inflation powering up past 5%) there will be a whole MOUNTAIN of repossessions to choose from ..

So by all means go for the current over-hyped and over-priced ‘hidden’ bargains (that the Banks refuse to give you a loan on) .. but don’t be too surprised when these ‘viable for cash increase’ properties turn out to be unsaleable to the next mug at any price ….

I’m planning to buy an investment property when I’m 18 (16 currently) and rent it out. I’ve brought up the topic at school and some friends have expressed some interest. When the time comes should I buy the property with a friend? the worry I have at this is when the property appreciates in value, we might have different idea on what to do with it.

What are your thoughts? would you do it?

Make sure that you have agreed what your business plan is before you enter into the agreement with your friend. If it is to buy and then sell on when it appreciates, have this written into the partnership agreement so that when the time comes, no matter if one of you has changed your mind, you are bound by that agreement.

I have also found a lot of useful resources for property investors here which may help you see what you are getting into before you put any money down on a property.

How does running a property investment business work.
Do you start off buying a few properties and rent them out.
Do you start by paying them off with a mortgage, so you can buy several properties at a time and pay each property off in certain amounts each time.
Do you normally set up up a company.

A well-thought-out business plan is essential when applying for a loan to buy rental income property.

Optimism is good, but when it comes to buying a rental property, it’s better to be realistic. The promise of what investors call “unearned income” is enticing, but it’s important to be aware of how much of your tenant’s rent check will be eaten up by overhead.

That’s why every potential buyer of a rental property needs a business plan. When you look for financing, a well-thought-out plan will improve your standing in the eyes of potential lenders.

First, determine your initial outlay, or what it will cost to acquire the property and get it ready for tenants. This amount, minus whatever down payment you have, is the amount you will need to borrow. It includes:

* the purchase price of the property
* any renovations and improvements, including permits
* a home inspection and/or appraisal
* the real estate agent’s and lawyer’s fee

Then you’ll need to estimate your monthly expenses, or what it will cost to maintain the property:

* mortgage and interest payments
* property taxes
* insurance
* utilities (not including those expenses you’ll charge tenants)
* administrative costs (office supplies, transportation, etc.)
* management fee (if you’re hiring someone else to look after the property)
* maintenance and upkeep
* classified advertising

This total will tell you how much rental income you’ll need to make the property profitable. This is fairly simple if you’re just renting out one apartment, or even a whole house. If you have several units to rent, your market research may take some time. You’ll have to compare your figures with rents for similar properties in your neighborhood to see if you will be competitive. Your city may also have regulations that limit how much you’re allowed to charge.

Once you’re confident that your rental income will exceed your operating costs, you’ll want to consider the long-term outlook, or how the numbers will change over the life of your investment. Consider factors such as:

* inflation
* the appreciation or depreciation of the property
* interest rates on your loan

Of course, these are difficult to predict accurately. As long as you understand your city’s rent control regulations, you should be able to forecast how much your rental income will rise over the years.

There are some common pitfalls in rental property business plans. Perhaps the most common is underestimating the amount of money you’ll spend on maintenance and upkeep. Your monthly estimate should budget for the major repairs that will inevitably come your way. Remember, too, that tenants don’t always pay on time. Think about how your cash flow will be affected by a late check or two — will you need a line of credit to sustain you, and can you afford the interest charges that accompany it?

A spreadsheet can give you a rough tally of these figures. Once you’re ready to look for financing, you may want to purchase books or software with business plan templates to make your document look more professional, and to make sure you haven’t left anything out.

I live in Texas and I’m planning on buying a property to rehab. Unfortunately I don’t have the money to pay cash so I was wondering if anyone could give me some information on other financing options. Should I go to a bank or a mortgage company? Are there special loans to apply for? I plan on starting a small L.L.C. company for my investment properties. Is there any government assistance for small businesses such as this? I don’t really know anyone in the industry so I am having trouble finding a lot of the information I need.

The more you finance, the harder it will be to get positive cash flow from a place.
Also, rehab always takes longer, and costs more to do than you expected.
If you can work with a company that does this for 6-12 mos you will get a better feel for the place…..
Start with the biggest down payment, or the cheapest place that you can feasible rent out.
If the place looks bad on the outside, you will have difficulty getting a mortgage….if you have family you can get cash with, that is probably the best way to start.

For an investment property (not to live in) should I use a home equity line, traditional fixed rate 30 year mortgage or something else. Let’s say I want to hang onto it for maybe 10 years….

I would not take out a HELCO on my residence for any reason. Do not invest unless you have 20% cash down payment then get a 30 year traditional fixed. If you hang on to it for 5 years it will be worth it.

Good luck!!!