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Real Estate

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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.

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