Real Estate

[Trauma-san]

How many of you have an interest in Real Estate as an investment tool?  I have two brothers, we're all really close.  Today we bought our first commercial property; we also own our home... actually the home we still have a mortgage on but we paid cash for a historic building on main street of a small town near here today.  We're going to renovate it and then rent each side out.

Anybody else have any Trump asperations? 

[Samoan Enforcer]

lol yeah my cousin,brother, and myself were talkin about that at christmas. we're all pretty young and dont have any knowledge yet but we have pledged to go in on some property once we get our money and real estate knowledge up

[jeromechickenbone]

I have some shithole rentals in the town i'm in.  It can be a pain in the ass, but it's a nice tax write off.   But I deal with real estate / land development / construction on the daily at my job.  I love the shit. 

I can't wait because I'm moving to Scottsdale, AZ in 2 months for work which has been one of the strongest real estate markets in the country.  It'll be awesome workwise but also getting connections and some investment opportunities.

If I were you, I'd hold off on buying anymore properties right now.  The market as a whole is slowing down and in probably 12 months from now it's gonna really begin bottoming out.  The fed hasn't bumped rates for about 3 straight quarters now and builders have more inventory than they know what to do with, so discounts are already taking place. 

I plan on buying a condo / townhouse / brownstone next year and I'm gonna hold it interest only for about 18 months and I should be able to flip it for a nice little profit.

[Trauma-san]

You and I have totally different investing strategies... I would never do an interest only, and I'm not really concerned with what the market will do over the next year, I'm thinking 30 years down the road.  The building I purchased was priced about half what it's worth, and is the original post office structure of a small 1000 population town, nearly 100 years old.  I likely won't be making any cash anytime soon off of it, but the value of the building is already twice what I've paid.  My main reason for purchasing it was the timing was good to buy it now and own it for years.  If I would have waited, the price would have been higher or it may never have been available at all.... this specific building was really attractive to me. 

Your way of doing it has merit too, you'll likely make much more money at it than I will.  I prefer to be more conservative though and pay cash, etc. so it doesn't matter to me if the building rents or not. 

Peace~

[jeromechickenbone]

Well I'll do the interest only, but I won't make interest due until the loan matures.  No monthly or quarterly payments. Within 12 months I'll have sold it, eat the interest payment out of my profit and never have used a penny of my own.

What were the circumstances in which you purchased this building?  You say it's worth double what you paid - what are you basing that on?  I find it hard to believe that a 100 y/o building in a town of 1000 people is desireable.  Did you get it appraised?  What kind of comps did the appraiser use?  Were they recent transactions within that town or did he have to go to another town to find comps?  Was it on the market for awhile, or was it a forclosure / auction?

Also keep in mind that a town like the one you're describing may not be around in 30 years leaving you with a sunken investment.

[Trauma-san]

We're on two completely different levels with this, dog.  Best wishes, though. 

[ecrazy]

^^just outta curiosity though, answer his question, did you actually get this building appraised or did you just think it in your head that it would become a historical landmark or something?

[Trauma-san]

^^just outta curiosity though, answer his question, did you actually get this building appraised or did you just think it in your head that it would become a historical landmark or something?

I don't feel the building will be a historical landmark, no.  It also hasn't been recently appraised.  Real Estate appraisal is not rocket science, especially in a town full of similar structures in similar condition of a similar age.  I ran across an excellent deal and had the cash to buy it outright;  I'm quite pleased with it.  For the price I paid, and the small amount of money we're talking about, an appraisal would be worthless.  I bought it from a gentleman who's had it for years and had no idea what it's value was. 

It's a 2300 square foot brick building, strong, sound, built in 1920.  What's that worth to you?  Throw a number at me. 

It's just different philosophies, neither are wrong, you should stick with what you know and what you're interested in.  I personally am interested in old buildings that can be renovated, Jrome seems to be more interested in newer properties.  He said he finds it hard to believe that a 100 year old building in a town of 1000 people is desirable.  I strongly disagree with that statement, I would rather buy a 100 year old building in a small town on main street any day of the week over a new construction in a larger city.  We're at exactly two opposite ends of a spectrum so I don't feel his advice or my advice makes much difference to each other. 

Peace~

[jeromechickenbone]

^^just outta curiosity though, answer his question, did you actually get this building appraised or did you just think it in your head that it would become a historical landmark or something?

I don't feel the building will be a historical landmark, no.  It also hasn't been recently appraised.  Real Estate appraisal is not rocket science, especially in a town full of similar structures in similar condition of a similar age.  I ran across an excellent deal and had the cash to buy it outright;  I'm quite pleased with it.  For the price I paid, and the small amount of money we're talking about, an appraisal would be worthless.  I bought it from a gentleman who's had it for years and had no idea what it's value was. 

It's a 2300 square foot brick building, strong, sound, built in 1920.  What's that worth to you?  Throw a number at me. 

It's just different philosophies, neither are wrong, you should stick with what you know and what you're interested in.  I personally am interested in old buildings that can be renovated, Jrome seems to be more interested in newer properties.  He said he finds it hard to believe that a 100 year old building in a town of 1000 people is desirable.  I strongly disagree with that statement, I would rather buy a 100 year old building in a small town on main street any day of the week over a new construction in a larger city.  We're at exactly two opposite ends of a spectrum so I don't feel his advice or my advice makes much difference to each other. 

Peace~

When I say desirable, I mean to another buyer.  In a town like that, who are you gonna end up selling that building to?  Like I said, in 30 years theres a great chance that that town may be non existant.  And you downplay appraisals but they serve a major purpose.  But no, you don't need one.  You could do title searches on comparable buildings in the area yourself, but that gets expensive and it may turn up that there hasn't been any ownership changes on other buildings anyway.

But if you have no history of comparable sales that are somewhat recent, thats a HUGE red flag.  That right there tells you there is no market.  If you bought for half of what it's worth, what are you basing that on?  I can't throw out an arbitrary number without knowing facts about comparable sales, demographics, proximities etc.  But you're right, appraisals aren't rocket science but they can be very useful, and a requirement in my opinion for any long term investment.

Yes, my true excitement is new developments / construction.  But I own rental properties myself, and I deal in these types of transactions everyday at my job.

[Chief]

fuck yeah, property is a damn good way to get your hustle on.

[Trauma-san]

No problems selling the bulding later on, really you'd have to see the situation to understand it.  We're talking about a small amount of money, again, as well.  I'm in a situation where if I lose my entire investment it won't hurt me, so I don't care if it makes money or not.  As for comparable properties, I've mentioned twice that the entire downtown is full of buildings similar to this one, all of them have sold over and over again in the last several years and it's pretty easy to determine what a buildings worth when there's an entire street of them around you that have sold recently.  Come on man, do you think it's really that big of a deal?  Honestly.  This particular building, a guy's been using for storage since getting it out of probate court years back for almost nothing.  He decides to sell it and priced it under half of what the building would actually sell for, I was first in line with cold hard cash to make a downpayment and cold hard cash to pay for the rest of the building as soon as we can get closing pushed through.  The neighbors on the left want to buy it, but aren't preapproved for a loan.  The people across the street were actually renting it, but were tossed out when the building went into probate and now can't afford two buildings.  Dude had people calling him about the property from New York and Texas while we were in the building checking it out... man this is the south, you don't understand the opportunities that can arrise down here with these country folks who are all laid back and low key.  That's one reason I prefer older buildings over new buildings.

Now, with all that said, like I said in the first post, I'm not in it strictly to make money.  I have a little bit of money, and I spent a small amount of it to buy this building.  I wasn't buying it to flip it and make a ton of cash next year off of it.  I'm much more into the rental side of things and there's also the opportunity here to help with the revitalization efforts of this little town's downtown area.  You keep saying that the building may not be there in 30 years; the land under it will be there for eternity and I own it.  The building itself is strong as a rock and built from brick, it's not going anywhere unless a tornado comes through town, and I've got hazard insurance so that'd be alright too. 

You're telling me I downplay an appraisal.  If a man's trying to sell you a building for 50 grand, and you think it's worth 100 grand... what happens when the appraiser agrees with me and tells the guy his building is worth 100 grand?  Come on man, use your head a little bit.  We're talking about a property he wanted less than THAT for, it's really a fantastic deal that we had checked out for a few days and by all accounts we just made a shitload of cash buying it.  Worse case scenario if the ground opens up tommorow and swallows it, I'll still be sitting here doing just fine without it so to me it's really not that big of a deal.... it's just exciting to own a dusty old building with some character to it. 

Peace~

[Don Seer]

all of them have sold over and over again in the last several years and it's pretty easy to determine what a buildings worth when there's an entire street of them around you that have sold recently. 

you just answered his question of "comps" with similar properties right there..


the property market over here is SO fucked right now.. its unreal.. prices have gone up something like 250% in the last 5 years..

the problem here is.. "buy to let" which is kinda like an "interest only" buy.. only allows the buyer to rent it.. (most interest onlys here stipulated the buyer must live there).. basically whats this has done is priced people with only one income out of the market. basically i'm looking at just being able to afford a 1 bed appt. whereas for the same money 5 years ago i could have got a 3 bed house for that. (course i didn't earn what i do now then..)

all the entry level properties are being sold to people who "buy to let".. and these people increase their portfolio so they have a clutch of houses (based on the equity of the others).. and basically spiral themselves into "sort of" owning a bunch of houses.. (they make their money when the house sells and have to hold above a a "yield" for each place.. that is a certain amount of return for each property is necessary to keep their heads above water..).. after 10 years these people sell these houses and get a fat cheque from each.. and buy more.. some do it to pay of their actual home.. so really.. these other people are paying their mortgage and they're just juggling figures. as long as you dont fuck up.. having more than 1 property (coz u gotta live somewhere.....) .. you're sorted..


either this cant be sustained.. or people will forever be forced to rent..

[jeromechickenbone]

No problems selling the bulding later on, really you'd have to see the situation to understand it.  We're talking about a small amount of money, again, as well.  I'm in a situation where if I lose my entire investment it won't hurt me, so I don't care if it makes money or not.  As for comparable properties, I've mentioned twice that the entire downtown is full of buildings similar to this one, all of them have sold over and over again in the last several years and it's pretty easy to determine what a buildings worth when there's an entire street of them around you that have sold recently.  Come on man, do you think it's really that big of a deal?  Honestly.  This particular building, a guy's been using for storage since getting it out of probate court years back for almost nothing.  He decides to sell it and priced it under half of what the building would actually sell for, I was first in line with cold hard cash to make a downpayment and cold hard cash to pay for the rest of the building as soon as we can get closing pushed through.  The neighbors on the left want to buy it, but aren't preapproved for a loan.  The people across the street were actually renting it, but were tossed out when the building went into probate and now can't afford two buildings.  Dude had people calling him about the property from New York and Texas while we were in the building checking it out... man this is the south, you don't understand the opportunities that can arrise down here with these country folks who are all laid back and low key.  That's one reason I prefer older buildings over new buildings.

Now, with all that said, like I said in the first post, I'm not in it strictly to make money.  I have a little bit of money, and I spent a small amount of it to buy this building.  I wasn't buying it to flip it and make a ton of cash next year off of it.  I'm much more into the rental side of things and there's also the opportunity here to help with the revitalization efforts of this little town's downtown area.  You keep saying that the building may not be there in 30 years; the land under it will be there for eternity and I own it.  The building itself is strong as a rock and built from brick, it's not going anywhere unless a tornado comes through town, and I've got hazard insurance so that'd be alright too. 

You're telling me I downplay an appraisal.  If a man's trying to sell you a building for 50 grand, and you think it's worth 100 grand... what happens when the appraiser agrees with me and tells the guy his building is worth 100 grand?  Come on man, use your head a little bit.  We're talking about a property he wanted less than THAT for, it's really a fantastic deal that we had checked out for a few days and by all accounts we just made a shitload of cash buying it.  Worse case scenario if the ground opens up tommorow and swallows it, I'll still be sitting here doing just fine without it so to me it's really not that big of a deal.... it's just exciting to own a dusty old building with some character to it. 

Peace~

I find it VERY hard to believe that a town with 1000 people have this downtown area in which the historic 100 year old buildings are being bought and sold regularly year in and year out.  Where are you getting this information from?  I've worked in towns that have 12,000 people and the downtown buildings don't turn NEARLY that quick, in fact the majority have been passed down through generations or have gone vacant or abandoned.  A town 1/12 the size does?  Doubtful.

And don't tell me what I don't understand.  I have years of experience in this field, in the exact type of market you're speaking of.  Hell I've done business in towns smaller than that one.  I OWN RENTALS IN A SHIT TOWN, lol. 

And never once did I say the BUILDING might not be there in 30 years.  I said the TOWN might not be.  Insurance ain't protecting you from that.  And I know you're not looking for a quick flip which is why I keep hammering home the point that if you want to hold it for a long time, you better hope that that town is still thriving like you claim it is now.  (Again, I don't buy it)

LOL, when, in your first post did you say you're not in it to make money?

How many of you have an interest in Real Estate as an investment tool?  I have two brothers, we're all really close.  Today we bought our first commercial property; we also own our home... actually the home we still have a mortgage on but we paid cash for a historic building on main street of a small town near here today.  We're going to renovate it and then rent each side out.

Anybody else have any Trump asperations? 

You asked how many of us INVEST and use Real Estate as an INVESTMENT TOOL.  Go look up the definition of INVEST, re-read your first statement and then come back and question my comprehension of what you're saying.

And back to the appraisal thing.  If I was investing $1000s of dollars (hell $100's of dollars, I'm a cheapskate), I'd damn sure want to know that I was going to be earning a return, regardless if its in 30 days or 30 years.  How do you know there aren't major structural issues?  Asbestos in the pipework?  I'd NEVER make a speculative investment without getting some solid facts that support what I think may happen.  It's called due diligence.  LOL at you telling me to use my head a little bit.  If only you knew how ignorant you sound on all of this...

Oh and weren't you the one warning me of the dangers of flipping those Wii's on ebay?  I sold all 7 in 10 days and netted over a $700 profit.

[Primo]

A lot of people in my area are buying up old buildings and factories and turning them into luxury condos and making huge profits. I am interested in the whole process and probably will be doing this in the future but I need more cash.

[Suga Foot]

I'm interested in revenue generating properties.  Like industrial buildings.  tenants pay for most of the things they need (electrical, plumbing, walls etc).  But I need to own residential before I can get a mortgage for anything else.