Time to buy up some cheap houses?

Kruser6 · Apr 5, 2007

Last March I bought a house here in Iowa and flipped it.

I bought it for $54,000 and by the time that I got the house ready to be sold the market was in a free fall. I made a mistake by getting in at the top of the peak, and it cost me right around $17,000 from what the realtor estimated the house would be sold for. It took me a very long time to sell it, which costs me a lot more money in interest and I also had to pay the bills for keeping it heated through the winter.

When it sold I ended up making around $5,000, but not what I was looking for.

I realize my mistakes that I made as it was my first time doing it, but the key mistake was buying at the top. Now, that we are still in the free fall is it time to buy buy buy?

My friend that got me into this just bought 5 houses for 30K each, he is going to rent them out until the market picks back up. Is it a good time to get back into this?

ClipJoint · Apr 5, 2007

I think each location/part of the country is different but from what I have heard it may go even lower.

I am also interested in this topic though as I think right now might be a decent time to start trying to buy up some foreclosures as they are at an all time high since so many people signed up with ARM's that are now too high for them.

Kruser6 · Apr 5, 2007

Here is the before pic

After,

ClipJoint · Apr 5, 2007

I can't see the photos...they are coming up as red x's.

Dawoofdaddy · Apr 5, 2007

I think you guys will have similar luck grabbing falling knives, but hey, maybe some people enjoy such activities.

:drink:

As CJ posted, not all markets are going to tank, but many will.

Kruser6 · Apr 5, 2007

Clip Joint said:
I can't see the photos...they are coming up as red x's.

Hmm, not sure why? They show up for me :WTF:

ClipJoint · Apr 5, 2007

Hmm...that is strange. They are still red x's for me.

Have you ever been to a small college town in the SE of Iowa? I can't think of the name right now but Iowa Wesleyan College is in this small town. I want to say Mount Pleasant.

Kruser6 · Apr 5, 2007

Have heard of it, but "know" I have never been down there.

Brooklynbomber · Apr 5, 2007

We entered a 6-10 year bear market in housing summer 2005. dead money for awhile. you will see zero appreciation in all areas of the US

GreenDoberman · Apr 5, 2007

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Just axe Gary about it!

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</TD><TD class=alt1 id=td_post_4008909 style="BORDER-RIGHT: #fdde82 1px solid">

<HR style="COLOR: #fdde82" SIZE=1>I think you guys will have similar luck grabbing falling knives, but hey, maybe some people enjoy such activities.

:drink:

As CJ posted, not all markets are going to tank, but many will.
</TD></TR></TBODY></TABLE>

When Woofdaddy speaks, wise men listen.:banger:

Dawoofdaddy · Apr 5, 2007

thanks gd. i know im a bit over the top with bearishness about certain things, but housing prices just went too haywire to continue.

kruser, not sure if you are just loosely using the term, but i hope you dont believe that just because something falls in price it has become "cheap".

thats not the correct way to look at value.

good luck with whatever you decide and when paying 30k per house, even ill agree its tough to not believe there is underlying value. most regional real markets are absent from homes at similar prices.

the last point id like to make about this is that regarding any investment, one also should benchmark their return.

if someone makes 5-10% (any #/% can be used) annual return with alot of cash outlay and downside price risk, when they could have made equal, or even greater return sitting in cash or something or just about anything else with less time involved, less cash outlay, less risk, in fact that 5-10% return financially speaking should viewed as a terrible investment.

fhmesq44 · Apr 5, 2007

For $50k, why not buy and rent them? I have to think someone will pay you $300 to cover the mortgage payment. Alternatively, I don't know where these places are, but if they are in college towns rent them to college students. You have an endless supply of tenants. Granted, they won't treat the house as well but you will also be able to charge more (theoretically offsetting the increased wear and tear) and just hold them and collect the rental income. And, they will live in anything. If you are smart/lucky, rent to chicks and you don't even have the wear/tear increase issue. Students pay more by the room than by the house. My sister lived in a place while in college that was like 5 or 6 BR and they each paid ~$200-250/month but the house was only worth about $75k. Mortgage on $75k is like $600.

Flipping in cheap markets isn't easy. You won't gain the type of appreciation or value add you will in more expensive markets. I'm not one for flipping but buying and renting I am down with. Buy a mobile home park, low maintenance cash cows. I own a 13 unit one and will continue to buy them.

crunch99 · Apr 5, 2007

My dad has couple of houses up for sale but no one's interested. Not a good climate right now, unless you plan to keep it for several years.

SSI · Apr 5, 2007

how fast would you guys buy this.....

triplex inside city limits, taxes and insurance run $100 per month ($1200) yearly........

all 3 rented for $350 each......

asking price $65,000.......

good ---- bad---- or great deal.........?

ClipJoint · Apr 5, 2007

SSI said:
how fast would you guys buy this.....

triplex inside city limits, taxes and insurance run $100 per month ($1200) yearly........

all 3 rented for $350 each......

asking price $65,000.......

good ---- bad---- or great deal.........?

Where is this?

Kruser6 · Apr 5, 2007

SSI said:
how fast would you guys buy this.....

triplex inside city limits, taxes and insurance run $100 per month ($1200) yearly........

all 3 rented for $350 each......

asking price $65,000.......

good ---- bad---- or great deal.........?

What kind of condition are they in- Are you going to have to put any money into them fix them up?

How much money could you put down and how much can you get your mortgage payments down to?

You are talking $950 a month then - your mortgage payments. Break even point would be right around 6 years depending on mortgage and interest rates.

Can you get them rented out on a regular basis fairly easy? Do they have any renters right now?

fhmesq44 · Apr 5, 2007

SSI said:
how fast would you guys buy this.....

triplex inside city limits, taxes and insurance run $100 per month ($1200) yearly........

all 3 rented for $350 each......

asking price $65,000.......

good ---- bad---- or great deal.........?

if they are in a decent area, I would buy those all day. a 7% 20 year mort for $65k is only $500/month.

SSI · Apr 5, 2007

tennessee........

good, bad or great deal.....

triplex is in ok condition...... good roof........ about 800 sq ft in each.......

fhmesq44 · Apr 5, 2007

where in TN? good area? ghetto? suburbs? college town?

SSI · Apr 5, 2007

would call it an older part of city......... close to library........

not ghetto, not suburbia, about 3 blocks from city square.........

Time to buy up some cheap houses?

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