Buying/renting houses?

[anton1o]

So.. Being from Australia the housing life is a bit different and ive recently been looking over the waters at American Housing to buy and to be honest there are ALOT of cheap houses..

I was looking in the Detroit area, which did look a bit ghetto, and it got me thinking.. Is America an easy place to own a home? Or is it very divided.. Such as if you have money you wouldnt be seen dead in a house only worth $15,000 and very run down.. And the people who are not so fortunate cant even afford that much money to have there own home..

On my side of the world in Melbourne a house that is only within 20mins drive to our main City(CBD) goes for about $300,000 3bedrooms, big block of land so a nice liveable house.. So to see a houses in America for such easy to obtain prices i was amazed.. Altho it may be an Australian thing to own your own home.

Sorry if this thread is vauge/stupid its just interesting to see something so different.

[sleep]

Detroit is a shit hole. it is a dead city. Your cost of living can vary greatly, depending on which part of the country you are moving.

Here in arizona, you can have a 5 year old, 3500sq ft house with a pool, and 3 car garage for $125k. If you look in Philadelphia (where im from), you are looking at over $300k for that same house.

Research the city/state you are considering.

[Bubbles]

You couldn't pay me to live in Detroit.

[ronmcdon]

US$ 300k in nicer larger city like Melbourne seems pretty good to me.
I was actually looking at a loft in San Francisco, and a 2 bedroom apt in Portland, OR for around the same price.
$300k wouldn't fetch me a shitty 1 bedroom condo in Van Nuys, CA (close to Los Angeles).

Not claiming to be an expert, but I'd probably stay away from most of CA if you intend to invest in property.
Stuff here seems really expensive and overpriced.

I'm surprised ppl are still buying property in Detroit.
I don't have a lot of confidence in their economy.

[hOngsterr]

RENT, you dont have to pay for taxes etc.
sure you have to pay monthly but hey

imo its the smart way.

[BustedS13]

RENT, you dont have to pay for taxes etc.
sure you have to pay monthly but hey

imo its the smart way.

don't listen to this guy. only rent if you know you're not staying around very long.

i live in St. Louis, MO and bought a foreclosed house about two years ago for $65K. it's a ~1000sqft house in a middle class area of town, very safe, DOT always repairs the potholes, good schools for resale, blah blah blah. i'll sell it for over 100K easily and buy something bigger, it's probably going up for sale in a year or so...
the monthly payment is $560. my first shithole apartment was more than that. and i mean, even if i had to move, i could still rent it out and make money on the deal. oh, and as far as paying taxes, they roll your property tax and insurance into the mortgage.
seriously, fuck renting, it's a fool's game. you're just throwing money away. the ONLY maintenance i've had to do was a small roof repair that cost about $150 and a roto rooter visit to the tune of $50. oh and it cost like $15 in parts to hook up the dishwasher and ice maker. not sharing walls, having a yard, having storage, having a garage, not dealing with landlords or bitchy fuckface neighbors, it's way better. aside from a downtown condo or loft, i'd NEVER live in another apartment. fuck that noise.

[anton1o]

I wasn't planning on moving to the USA sorry if it sounded like that, but i was looking at investing and possibly buying a house and renting it since there's alot more to be made over there from what Google has shown anyway..

When you do even the basic figures if your saying a house in America is only worth $100,000 for the same features if not more.. You could practically buy 3 houses for the price of 1 in Australia.

Thanks for the info BustedS13.. For a comparison in Australia a nice house in an older area thats been kept in good condition etc is generally about $300 to $350,000, There arent many if any suburbs in Australia where people have just left like Detroit i was amazed to even see how so many houses are just empty, It is rather easy to find renters in Australia.

This house in my area of Melbourne is $340,000
http://images2.au.reastatic.net/456x342/props/107006766/[email protected]/20101201091555.jpg

[WanganRunner]

Don't buy any real estate without a thorough understanding of the market.

All real estate is local.

I work in real estate acquisitions and I select sites that my firm then spends eight or nine figures purchasing. I've been doing this for six years and there is still a LOT about it I don't know. It isn't simple, especially when you're working out of your home market.



A $15,000 house in Detroit is going to be abandoned, halfway falling down, and probably inhabited by violent crackhead squatters. It may as well be a house in Somalia.

Most professional commercial real estate trend reports that list average national statistics put an asterisk next to their figures. This asterisk leads to a footnote that usually says "except Detroit", as the researchers either have no idea what will happen there or, more likely, they think that the city will contract over time into a *much* smaller city than it is now. It's an anomaly.

[driftsilvias13]

RENT, you dont have to pay for taxes etc.
sure you have to pay monthly but hey

imo its the smart way.

Renting is definitely NOT the smart way.

[ronmcdon]

I don't know if buying in the O.C. (or so I presume based on the poster's location) is such a great idea.
You're probably looking $500k houses on average, if not more.
Seriously, I would NOT want to spend $2-3k a month on mortgage payments.
You'd have to make a shitload of money to make that worthwhile, and even then it's arguably not the best investment.
Renting for a few hundred bucks a month (or even staying with the parents) would be much more practical imo.

Now if you lived in the a part of the world where you could get a house under 100k that would be completely different.

[ManoNegra]

Housing in any of the worthwhile ares of CA is not cheap
reason why I looked into Pomona for a fixer upper
something similar in a decent are in LA would have cost me two to three times as much.

[ronmcdon]

Yeah, but would it be even remotely worth it to commute 2-3 hrs each way to work?!
I'd rather set up a tent / cardboard castle in downtown LA with the homeless ppl.

If I had to buy property in the inland empire (horrid part of CA w/ cheap property),
I'd only do it to rent it out, and then make sure the rent covers at least the mortgage payments.
A friend of mine does just that, and is a slum-lord for a bunch of shitty properties out in god-forsaken Fresno.
He keeps on buying new properties every year, so I assume it's semi profitable.

[ManoNegra]

^that's part of it
good investment, fix up, sell it for profit, buy house in better area
rinse, repeat
and yeah, ~1hr + commute f-ing blows

[Bubbles]

Investing in Detroit.












:rofl::rofl::rofl::rofl::rofl:

[Vision Garage]

Buying a house is in investment. Renting is PURE fail. ;) Let me know if you have any major questions. Im a realtor and dont mind answering questions you have.

[BustedS13]

Investing in Detroit.












:rofl::rofl::rofl::rofl::rofl:

hey, go easy on Detroit. those people are living in Mad Max times.

[ManoNegra]

Investing in Detroit.



:rofl::rofl::rofl::rofl::rofl:

moi?
I'm buying in the nice area of Pomona, CA
which is pretty cool
but far from downtown LA, beach, clubs, etc
takes getting used to but, aside from the commute, I'm pretty happy

[axiomatik]

There is certainly money to be made if you know what you are doing. But if you want to buy a house to rent out, it has to be in an area people want to live in. As mentioned above, Detroit is kind of a unique case. Decades of sprawl/white flight/people moving to the Sun Belt have left large swathes of the Detroit Metro with empty houses. That house is so cheap because the sellers can't find anyone to buy it. Now, that is not to say that Detroit is some post-apocalyptic wasteland, after all, the Detroit Metro is still home to a very large middle class made up of engineers/accountants/managers etc. But there are also many neighborhoods filled with abandoned houses. And even if you bought one cheap, would you be able to find a renter, or sell it later?

A safer bet would be a sun-belt city like Phoenix, Houston, Atlanta, which have growing populations. The housing bubble created a lot of foreclosures and short sales, but because the populations are still growing, there is a good chance you will still be able to find renters and future buyers. I just happened to be browsing around some neighborhoods in my hometown of Phoenix, out of curiosity. For example, in the neighborhood my in-laws live in. They bought their house in 2005 (new construction) for just over $500k. Current valuation puts it around $250k, but that is probably on the low side considering its size and features. The house across the street from them is 4500 sq ft, and was originally purchased for $630k. It just sold recently for $309k. So if you know what you are looking for, you can certainly find some deals and great investment opportunities. (it looks like my in-laws were creamed by the bubble, but don't worry, they sold their previous house for $550k, and it certainly wasn't really worth anywhere near that).

But average house prices vary greatly from city to city. Rust belt cities with lots of inventory will be cheaper, maybe ~$100k for a starter middle class home. Here in Atlanta, maybe $150k. Phoenix ~$150k though it varies a lot because of the bubble. Unique cities like Los Angeles, DC, San Fransisco or New York are much higher.

[hOngsterr]

i guess thats your guys stand point on it, thats why i did said IMO,
but i rather rent then own a house.

but thats just me.


foreclosed houses are, of course a good investment because their cheap and easy to flip. My former boss would buy houses in temecula and flip them and would make profit out of it, he's still doing so, and as of right now he's renting a big ass house in laguna hills, up in mountains somewhere.

if you have the money to do so, then do it i guess, but renting all you have to do is worry about the monthly payments, as far as i know my parents have been renting the house that i lived in for 20 years now, i guess when im older ill find out my plans to own a house and pay taxes etc, or if ima rent my whole life because i turned into a bum, but who knows. Only time will tell.

[WISH ONE]

In so cal the further you go away from the beach the less expensive things get.
You can easily purchase a nice fixer upper in Inland empire for 100K
that same house in Orange county is upwards of 500k.
The condo next door to mine is selling for $600k fully remodeled beach front 2 bed 2 bath in Huntington beach just for reference and its tiny.

[axiomatik]

i guess thats your guys stand point on it, thats why i did said IMO,
but i rather rent then own a house.

but thats just me.

There are pros and cons to renting versus owning. On one hand, if you rent, and there is a problem, the landlord is responsible to take care of it. However, when you own a home, you build equity in it, as long as there aren't any giant financial shocks like the one we just had. At the end of a 30 year old mortgage, you own a home that is worth decent money. After 30 years of renting, you don't have anything. Also, all mortgage interest is tax-deductible. So I get a substantial tax break by owning my home versus renting it. Years down the road, when I am paying little in interest versus equity, it isn't as much of a tax break.

But none of this is relevant to the OP.

[holemilk00]

Detroit is not as bad as previously stated in this thread. Like any city there are good neighborhoods and bad ones. The thing that sets Detroit apart is that in the worse parts of town, there are entire neighborhoods that are completely abandoned. If you get up towards Sterling Heights and St. Claire Shores, there are still million dollar houses and gated communities on golf courses. If you come south towards where I own a house its more of a middle class area made up of many older established well kept developments mixed with those that were part of the late 90's early 2000's boom that are equally well kept. What most people don't realize about Detroit, and SE Michigan as a whole, is we were in a depression for 5 years before the rest of the country started to notice even the slightest decline in the economy. Luckily with the new laws passed that allows for ease of permits for the movie industry, and the special tax cuts for new industry that has brought the car battery companies here, it seems to be turning around. I know for the first time in 8 years the SEV (tax value) of my house went up this year.

As for the original topic, its always better to buy if you buy within your budget and you are going to do one of two things;
1. You are planning to stay in the area for longer than 2 years (this escapes capital gains taxes here in the US)
2. You are in a position that if you do move within 2 years you can rent the home out. This will sometimes allow for positive cash flow depending on how well you did your research before buying on home values versus average rent in your neighborhood

I knew I wouldn't be here for much longer than 2 years but at the same time I wanted to capitalize on the HUGE renters market in the area I'm in. So I bought a foreclosure on a 30 year fixed at a rate that makes my payment less than half what the going rent rate is for a house of equal size in my neighborhood. So once I move to Florida in May the rent I collect will be enough to cover my mortgage, insurance, and property taxes and still give me about $350 a month cash flow. I know that doesn't sound like much, but keep in mind that's on top of the house paying for itself.

Renting is a good idea if you are on a tight budget, or you don't plan to be in one spot for long and don't have the time to be a landlord down the road.

The argument of renting because you don't want to take care of a place isn't valid because you could easily buy a condo or a townhouse, pay the HOA fees and have the property management company take care of all the maintenance for you.

[5pecialist]

Be cautious buying foreclosures from banks. They don't have to disclose structural issues and code violations...

[holemilk00]

Be cautious buying foreclosures from banks. They don't have to disclose structural issues and code violations...
Like with buying any house, always get an inspection.

[240sx123$]

My mom just bought a house in georgia for 52,000 on an acre of land. 3br, 1 bath, ranch style house. Not bad for 50k. It was appraised in 2004 at 126k. If I were in a position to buy a house right now i totally would, theres a fuckton of money to be made for the smart investor who banks on the real estate market coming back.

[BustedS13]

Be cautious buying foreclosures from banks. They don't have to disclose structural issues and code violations...

i don't think you can get a mortgage without an inspection. and anybody who would is retarded

[5pecialist]

You can indeed get a mortgage without inspection. This law may vary from state to state. Anyway, inspectors can only find obvious issues and cannot be sued for missing something found later, whereas sellers must disclose known issues and it's easier to come after them for damages. Banks have strong systems in place to avoid such entanglements. Also, inspectors do not consult with the county/city to find code violations, and since banks don't have to disclose issues, the buyer may get stuck with them.

I bought a place from a bank & a year later got notice from the county of an outstanding violation (which the bank knew about I'm sure, but didn't have to tell me) that cost me $4,000 to fix. So, like I said, just be careful!

[BustedS13]

I bought a place from a bank & a year later got notice from the county of an outstanding violation (which the bank knew about I'm sure, but didn't have to tell me) that cost me $4,000 to fix. So, like I said, just be careful!

what happened? like, what did your inspector miss?

[holemilk00]

I bought a place from a bank & a year later got notice from the county of an outstanding violation (which the bank knew about I'm sure, but didn't have to tell me) that cost me $4,000 to fix. So, like I said, just be careful!

If it was something like backed taxes, an asset fee such as connecting to public works like water or sewer, or a noncompliance violation for a city/county/state code then it is the banks responsibility to inform you IN WRITING of those outstanding fees before closing. This is why you have to have a closing at a law office or at least a third party law office representative present where ever you close. Its also why these types of law offices carry such a heavy bonding for this. If something was missed by the lawyer, and the bank refuses to pay, then the lawyer and his/her office is liable to repay you for the fees. This is the sort of stuff I'm in school for at the moment, and this law is accepted by all 50 states. You should really take your payment history and all the paper work you have back to the lawyer that handled your closing because its the banks responsibility to reimburse you for these sort of fees.

[holemilk00]

And be quick, according to my text book in California the statute on real estate violation is 3 years from your closing date.

[5pecialist]

what happened? like, what did your inspector miss?
There was wood rot in some beams under an outside porch. Even though I had used that structure all summer long and it looked fine, the city declared it unsafe years ago and threatened to board up my unit, fining me every day or auctioning off my unit for damages. In the end, I had to pay to rebuild the wooden structure (under HOA rules I couldn't just delete it since it would change the appearance of the building).

If this had been owned by people instead of a bank, and they failed to disclose this outstanding violation, I could have come after them for damages. Somehow since they are a bank & sold it as a foreclosure, they were able to get around any & all legal responsibilities.

I realize this probably a worst case scenario... but shit does happen! I have shit for luck.

[ronmcdon]

I guess that's another thing to take into consideration.
Avoid properties with Nazi HOA's.
It's just another endless source of frustrations, if not expenses.

[orion::S14]

If it was something like backed taxes, an asset fee such as connecting to public works like water or sewer, or a noncompliance violation for a city/county/state code then it is the banks responsibility to inform you IN WRITING of those outstanding fees before closing. This is why you have to have a closing at a law office or at least a third party law office representative present where ever you close. Its also why these types of law offices carry such a heavy bonding for this. If something was missed by the lawyer, and the bank refuses to pay, then the lawyer and his/her office is liable to repay you for the fees. This is the sort of stuff I'm in school for at the moment, and this law is accepted by all 50 states. You should really take your payment history and all the paper work you have back to the lawyer that handled your closing because its the banks responsibility to reimburse you for these sort of fees.

Along those lines, don't forget about Title Insurance. It's pretty standard to obtain title insurance as part of closing on real estate. Many lawyers who do a lot of real estate work are the title insurance brokers.

Basically - If there is an existing lien on a property you buy, and they miss it somehow...the title insurance will typically cover the expense.

...

As for owning rentals - I manage a number of rental properties in my area, and it's IMPOSSIBLE to manage unless you're local, IMO.

if you have to pay for any work that's needed (even simple stuff)...you'll piss away all your rental income.

Assume you have a good renter for a year or 2...and they move out. You'll need to go in, clean the place out, touch-up paint, etc...and then spend the time to find a new renter (including taking applications, screening them, etc..).

Sure, you can have an agency do it for you...but it kills profit.

...

AND, bear in mind...for those of you are are going:

"Awesome, I'll buy a $75,000 property and it'll be worth $100,000 in a few years. $25,000 for doing nothing!!!111!!!1!!!!"


Factor in closing costs, maintenance costs, property taxes, and income tax (even capital gains)...and that $25,000 profit turns into $10,000 real quick by the time you get a check.

On top of that, imagine the HVAC system goes out while you own it, and it costs you $4000 for a new one. Or a new roof ($5,000-6,000, EASY --- I just did a $14,3XX roof on one of the houses I manage.).

Now that $10,000 you would have made, after taxes and fees...is pretty much gone.

So don't approach "flipping" or renting as a quick-n-easy buck. It's not that way, anymore.

- Brian

[5pecialist]

I guess that's another thing to take into consideration.
Avoid properties with Nazi HOA's.
It's just another endless source of frustrations, if not expenses.
Avoid HOA's in general.

I just got notice that our HOA is going to assess each owner $1,500 for building repairs. There goes my plans for a Willwood big brake kit... and decent Christmas gifts for my bro and sis :Owned:

[WanganRunner]

^^
WTF?

Are you in a Condo?


My HOA has draconian "appearance" rules, but generally doesn't make my life difficult. They shovel the sidewalks, mow the median grass, keep up the pool, etc. I pay them $80/month and they don't complain about my many cars or loud garage activities.

[WISH ONE]

My lease is up and condo is up for rent this month.
$1800/month.
HUNTINGTON PACIFIC CONDOS
on the sand in Downtown HB.
gated, 2 parking spaces security.
PM me if interested.