Investment Property

[Acein8ter]

Who has investment property on this board?

I puchased a few houses in Las Vegas in 2004 which are doing OK.

Last year, I purchased 2 duplexes in Austin, TX and 1 SFH in Leander, TX (Just north of Austin)

Austin seems to be running counter cyclical to the east and west coasts. While the home prices at both coasts are going sideways to declining, Austin as well as some other areas in the 'sunbelt' are going up.

I have stock through my company and am planning on selling early next year to put down on a small apartment complex. I'm thinking about North Carolina, around the Raleigh, Durham, Chappel Hill area.

Thoughts?

[HoldingFolding]

Probably not relevant to your cause, but I've bought a few rental properties in Japan, some through bankruptcy auctions & all with ROR of over 12%. I'm currently looking at a block for $1m consisting of 22 'single room' apartments with a ROR of 12.68%pa. I'm hoping to arrange 50%+ financing at 2.45% so that should push the net ROR over 20% exclusive of vacancies & maintenance. My long term concern is Japanese demographics with less and less young Japanese around to rent this type of apartment, but hopefully I'll have made my cash before this becomes an overriding consideration...

[sticking hands]

How much did you put down on your duplexes in Austin? I was considering this very idea earlier this year (in the Spring). Has it been difficult to rent out those properties? Instead, I wound up purchasing a house in the Bay Area (to live in). Feel free to PM me if you think this might not be germane to your initial post.

[boardertj]

I too was looking into investing in the Austin and North Carolina areas. I see that you are in cali, (socal for me) and the REI market here is quite tough. How much homework and what kind of homework did you have to do when looking out of state?

[Acein8ter]

Holding: Wow, Japan? I never thought about going that far to invest in rental property. Guess we all need to expand our knowledge in all areas of REI. I have heard of people going to France and Mexico though.

Sticking: I did the basic 20% down. I purchased one in S. Austin (2/1 and 3/2) for 203k and got a pretty good deal thanks to the realtor. I spoke with him a few months ago and he stated that it would sell for 240k or so.

I purchased the second one in SW Austin for 218k (3/2 on both sides). They are building a new AMD campus right down the street which should be great for the area. I have had no problems keeping them rented, 1 year long contracts and a few have released.

They rent out for a total of 1700 and 1720 respectively.

Boardertj: Yeah, I'm from the South Bay area and the REI market is pretty tough right now. In general, if your going to purchase rental property and hold it for 3, 5, 7 years plus, you want to follow the 1% rule. It should be able to rent out for 1% of the price you paid for it.

In the Bay Area, you can get a SFH for 700k, but it will rent out for 2k a month. Not a good deal... In North Carolina, you can get a 4 plex for 170k and it rents out for $2050 or so.

Research? I was looking for price appreciation for LV and the Austin homes. Other areas are good for Cashflow which is what I would be going for with the Apartment.

I looked at some of these items before purchasing:

*City with +600k people - Need a rental base

*City that has high job groth - People moving in (Big +)

*Limited land to build on - Supply and demand. Look at Manhatten, the Bay Area, Hawaii, Hong Kong, Las Vegas. They all have limited amount of land to build on.

*Environment - Weather, culture, nightlife, attractions, etc... People are not coveting a move to a place that is -10* in the winter for an example.

*Warm state - My guess is that the baby boomers will be moving more towards the warmer states for retirement. When your 60+, cold weather doesn't feel very good especially if you have arthritis.

*Infrastructure build out - Building of roads, highways, freeways to accomodate the increase in population.

*Cashflow - Need to break even at a minimum. This is with PITI, Homeowners, Management.

I'd advise you to read as many REI books as you can if your going to get into this type of investing. A good book to start with is Rich Dad Poor Dad. It doesn't tell you HOW to invest your money, but changes the way you THINK about money.


GL

[boardertj]

Ya I've heard good things about Rich Dad Poor Dad and am going to pick it up soon. Any books you could recomend for more REI specifics?

[Acein8ter]

Also from the RDPD series is Cash Flow Quadrant. (Skip all of the others IMO, too many and a lot of stuff that doesn't apply).

Technical - The unoffical guide to Real Estate Investing. Once your past SFH's, go to 'The complete guide to buying and selling apartment buildings'.

For some good fundamental REI stuff, I listen to a few guys on the radio call 'The Real Estate Guys' here in the Bay Area. Google them and listen to their old broadcasts, you cna learn quite a bit.

A few other books worth reading are: Richest Man in Bablyon, Think and Grow Rich.

In general, you want to invest your money so you get an income stream (Passive income) that is higher than your monthly expenses. Much easier said than done, but very possible.

You will need to grow your capital first, then go for monthly cashflow. (And retire early)

GL

[boardertj]

Thanks for the recomendations. I'm only in my second year of college so I have some time to learn. I plan on doing some bird dogging (along with poker) to build up capital and then get more into investing.

[snowbank]

A few other books worth reading are: Richest Man in Bablyon, Think and Grow Rich

Agreed. Richest man in Babylon is pretty much Rich Dad Poor Dad book 50 years ago imo though.

[snowbank]

Who has investment property on this board?

holla

I have stock through my company and am planning on selling early next year to put down on a small apartment complex. I'm thinking about North Carolina, around the Raleigh, Durham, Chappel Hill area.

I looked VERY heavily into this area. It looks like it will be an appreciating area for the next few years.(not based on speculation, but research) I don't know if it will get any sort of boom like AZ, CA, NV got, but it looks like it will appreciate at a steady rate at least. It's also an area that can cashflow if you know how to find deals/analyze the numbers. I looked at a ton of numbers on deals there, and actually found a condo for $55k that brought in $700-$750 per month.(decent HOA fee, but still a great cashflow deal) I decided I wanted to flip instead, so didn't end up going into that area, but recommended some properties I found to an investor friend of mine and he's looking at purchasing a few out there. There are definitely deals to be found out there. The research triangle area= a lot of people who have some money and need good places to live. There are also tons of college towns in the areas, depending on where you look if you want to just try to get the highest cashflow there as opposed to buying for cashflow/appreciation.

Another investor I know who I spoke with yesterday runs a real estate investment company out of TX. He is doing a lot of deals out there, but is not investing in the Austin area where you mentioned. He said in his opinion there are several areas of TX that are some of the best places to invest in right now.

If you need any more info on the Raleigh/Durham area lemme know.

-Bill