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InvisibleZippoZM
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buying foreclosures, and renting them out
    #8030702 - 02/16/08 10:22 AM (15 years, 11 months ago)

so recently i have been looking into foreclosures in the Midwest, particularly those in college towns.

you can pick up a 2-3 bedroom house for under 100K and rent them out at 900/month.

seems like a viable investment opportunity.

anyone ever do this? have any input on the matter?


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"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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OfflineApJunkie
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8030722 - 02/16/08 10:28 AM (15 years, 11 months ago)

As a matter of fact I've been in the market for the exact same thing.

I'm still in school however, so I'll be mortgaging a house while living in it until my degree is completed (still collecting rent from my roommates though), but once I'm graduated I'll be renting it out to other students.

It's a great time to do this with the market so buyer friendly and mortgage rates so low.


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InvisibleGoodbyeOrb
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Re: buying foreclosures, and renting them out [Re: ApJunkie]
    #8030852 - 02/16/08 11:17 AM (15 years, 11 months ago)

jump on it though, the rates won't be this low forever.


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InvisibleGoodbyeOrb
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Re: buying foreclosures, and renting them out [Re: ApJunkie]
    #8030859 - 02/16/08 11:18 AM (15 years, 11 months ago)

oh yeah, make sure that you do a lien search first, just cuz you buy the first mortgage in foreclosure doesn't mean that it is lien free.


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OfflineGnosticWarrior
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8031386 - 02/16/08 02:50 PM (15 years, 11 months ago)

Warren Buffett doesn't particularly like to invest in RE outright. He did invest in REIT's though. I hear when it comes to RE Sam Zell is the man. I couldn't find an article I read where he talked a little in detail how he started in RE in college. Renting out rooms to other students.

But here's a pretty good quote I found:

“In my 40 years in real estate, I’ve found there is only one metric that matters — replacement cost.” He says the spread between a building’s replacement cost and its economic value is as wide today as it was in 1993 — mainly because the cost of construction has increased.

He admitted that like most real estate investors he’s always optimistic. “In every market and in every situation there is opportunity,” Zell said.

http://www.businessweek.com/the_thread/hotproperty/archives/2005/11/zells_favorite.html


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InvisibleGoodbyeOrb
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Re: buying foreclosures, and renting them out [Re: GnosticWarrior]
    #8031689 - 02/16/08 04:36 PM (15 years, 11 months ago)

Probably not a good time to invest in REITs though, they have been driving up values BIG TIME and are likely to suffer with the market turn and subsequent recession.


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OfflineGnosticWarrior
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8032101 - 02/16/08 06:20 PM (15 years, 11 months ago)

I did get to find this cool video presentation of Sam Zell.

http://whitman.syr.edu/videoarchive/video.aspx?vid=8938e558-18f8-421d-8a1c-064399dc7302

Thanks for starting this post.  I wouldn't have found this video otherwise. :thumbup:


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OfflineGnosticWarrior
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Re: buying foreclosures, and renting them out [Re: GoodbyeOrb]
    #8034367 - 02/17/08 11:42 AM (15 years, 11 months ago)

Buffett was buying REIT's back in 2000-2001 for his personal accounts. I think he sold his positions by now.

http://findarticles.com/p/articles/mi_m3601/is_22_47/ai_69415861


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Offlinekristofer
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Re: buying foreclosures, and renting them out [Re: GnosticWarrior]
    #8034388 - 02/17/08 11:48 AM (15 years, 11 months ago)

yep, congratulations capitalism, for allowing men with money to take advantage of those *without* it. exploiting students who are already taking tremendous risks by borrowing money for an education is pretty fricking low on the morality scale.

hey it's all part of the college experience right?


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OfflinegeokillsA
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Re: buying foreclosures, and renting them out [Re: kristofer]
    #8034496 - 02/17/08 12:22 PM (15 years, 11 months ago)

How are these students being exploited? Any investment involves a risk to reward ratio. A student seeks to invest in him or herself by taking on the risk of borrowing money for their education. If this student chooses a good educational path and more importantly, remains dedicated to their education and chosen career, they should be able to pay off those loans without too much trouble and in the long run, their reward will be the ability to make considerably more money than they may have without their loan financed education.

On the other hand, the lender risks not getting paid back by giving these students money, with the potential reward of getting paid for the time-value of his money. There is going to be risk on both sides, just as there is going to be reward on both sides. Please clarify if I totally missed what you're complaining about. Quite frankly, I'm not sure how the discussion took this turn from real estate investing to students getting ripped off by the capitalist structure?


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OfflineGnosticWarrior
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Re: buying foreclosures, and renting them out [Re: kristofer]
    #8034801 - 02/17/08 01:47 PM (15 years, 11 months ago)

IMHO, most people who criticize capitalism have a poor comprehension of it and economics in general. I would also recommend everyone to watch the video of Sam Zell. I found it very interesting. But also a part of it did not sit well with me. Why? Bcs in Sam Zell, I saw a winner and it's not about the money. He has what I want, which is that high level of self confidence. Confidence goes a long way in getting the results you want in life. I realize this confidence is what I lack.

I could blame him and cast stones at him. But logically, this would do no real good bcs it does nothing in helping me gain that confidence in myself. It would be better to see what I could learn from him. Discover my own talents, believe in myself, and keep challenging myself one small bar at a time. I don't think I could gain that confidence and get what I want out of life any other way.


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InvisibleZippoZM
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Re: buying foreclosures, and renting them out [Re: GnosticWarrior]
    #8036561 - 02/18/08 02:53 AM (15 years, 11 months ago)

well allright.

ive been looking into this whole foreclosure thing, and it seems to be more and more of a profitable idea.
5
considering how little one has to put down on a house (only 5%-10% so i hear) and the fact that i could take out as much as a 30 year note on the properties, seems to make them a viable cash flowing business.

furthermore, the foreclosure rate in Nevada (where most of my present and future business ventures are going to be located) is up roughly 700%.

also, i heard detroit was even worse than nevada, and im quite certain that i could buy an old warehouse for very cheap out there. i dont know what the hell i would do with it, but ill be damned if it dosent sound like a nice thing to have, in the long term investment concept.


--------------------
PEACE

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"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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InvisibleGoodbyeOrb
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8037436 - 02/18/08 11:05 AM (15 years, 11 months ago)

I've got a friend in the biz in nevada, been thinking about buying a vacation home out of foreclosure there.  Nevada's foreclosure rate is RIDICULOUS.  BTW, foreclosure sales are typically cash at time of closing in the amount of 10%, so let's say you buy a house for $70,000 at a foreclosure auction, you have to fork over $7K right there.  Then you have to go get the rest.  In other words, make sure you hook up with a banker ahead of time and know what you will be able to borrow from the bank.:thumbup:  This way, you don't overbid and get stuck with a house you can't pay for.


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OfflinegeokillsA
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8037453 - 02/18/08 11:10 AM (15 years, 11 months ago)

Be careful in the hard hit areas of Nevada, California, and Florida. Reason being, with such a glut of foreclosures in the area, it may be difficult to secure renters while you wait for the house to appreciate over time. My father just last month picked up a property in Victorville, California, for roughly $200,000 - I can't recall the specific lot or building size, but it's darn huge, three car garage, 5 bedrooms, 4 baths. He even had a family interested in renting when he made the purchase, but they have since bailed and now there is no one to rent it. Therefore, if you are tight on cash to begin with, make sure you won't be counting on rental income over the short-term to cover your mortgage.


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InvisibleZippoZM
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Re: buying foreclosures, and renting them out [Re: geokills]
    #8037679 - 02/18/08 12:12 PM (15 years, 11 months ago)

what would you consider short term? 3 months, 6 months? a year?


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:mushroom2:zippoz:mushroom2:



"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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OfflinegeokillsA
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8038152 - 02/18/08 02:01 PM (15 years, 11 months ago)

I really don't know, as I don't know how long it will take for the housing market to stabilize and recover - and of course different regions of the country will respond differently. Also, it depends on your pricing. If you lower your price enough, I'm sure someone will rent -- it's just a question of whether that reduction in monthly income is economically feasible for you. If you can line someone up to rent a property before you purchase it, and have them enter into a contract, that would probably be the best way to go about it. Or, if you buy the property for yourself to live in.


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··∙   long live the shroomery  ∙··
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InvisibleZippoZM
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Re: buying foreclosures, and renting them out [Re: geokills]
    #8038223 - 02/18/08 02:20 PM (15 years, 11 months ago)

yeah, i think that lining up a renter before i buy the house would be a big plus.

doing things like that have helped me out greatly in the past, even to the point where i could do a "dual escrow" and sell someone a property i didnt even own, allowing me to completely avoid having to invest any of my own money in the property i was "selling"


--------------------
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:mushroom2:zippoz:mushroom2:



"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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InvisibleZippoZM
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8038227 - 02/18/08 02:21 PM (15 years, 11 months ago)

damn, i wish the banks were open today. i need to talk to my banker, and see about mortgage loans.


--------------------
PEACE

:mushroom2:zippoz:mushroom2:



"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."


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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8041930 - 02/19/08 08:41 AM (15 years, 11 months ago)

Do you have the time to maintain the property? Are you prepared to clean up after renters trash the house and bail on rent? Are you prepared to deal with tenants who refuse to pay rent or leave the property?

I know where I am the law is much more in favour of tenants and they can easily screw you over for many months of rent. Also I would be weary of being the absent landlord - i like to know whats going on with my property on a regular basis.


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Invisiblememes
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Re: buying foreclosures, and renting them out [Re: Irradiated_Feces]
    #8042277 - 02/19/08 10:39 AM (15 years, 11 months ago)

i think the college town idea is where you'd have to do it. there's ALWAYS renters wanting a place to live near campus at my school - never a void in the market


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InvisibleLunarEclipse
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8046390 - 02/20/08 08:46 AM (15 years, 11 months ago)

Quote:

yeah, i think that lining up a renter before i buy the house would be a big plus.




dream on...


Edited by LunarEclipse (11/16/08 03:29 PM)


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InvisibleGoodbyeOrb
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8046782 - 02/20/08 11:12 AM (15 years, 11 months ago)

Quote:

Capatalistc nomad said:
yeah, i think that lining up a renter before i buy the house would be a big plus.




Drafting a lease on a piece of property you don't own yet is tricky, and the bank will not give it any consideration unless you have a signed lease, as letters of intent are not legally binding on either party. Ideally though, if you knew someone you could count on to lease it, then put it under contract, you could then right a lease contingent upon your closing, and the bank would consider that into their financing decision. That would ideally be the best way to go about it.


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InvisibleLiz
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Re: buying foreclosures, and renting them out [Re: ZippoZ]
    #8073063 - 02/26/08 03:22 PM (15 years, 10 months ago)

Do you already own property? If not, you're going to have an issue purchasing a foreclosed home with the intent of renting it out. Most banks will not allow you to buy "investment property" until you've demonstrated the ability to pay the mortgage on your primary residence.


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Remember, remember the fifth of November
The gunpowder treason and plot.
I see no reason why gunpowder treason
Should ever be forgot.




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