How Do I Get into the Real Estate Market?

[cschin4]

I would like to invest in real estate. I am early 40's, have no debt, home is paid for, etc. I would like to look into buying real estate. I have spent alot of time looking at the local market and have a good understanding of it. But, at this point, I am not sure what to do next. Should I consider purchasing rental property? If so, should I look at small 2 BR homes, duplexes, or homes? Or should I just look for property that has been sitting on the market for a long time that may need some TLC, etc and then flip them? I have never done that and don't really have alot of time to spend remodeling so I would have to hire out.
And, the area I live in is a rural , somewhat depressed area. What is your approach to Real Estate?

[34saving]

These guys have lots to say on the topic. http://reiplace.com/newsgroup/list.php?1

To be honest, dealing with an icky market in a rural depressed area can be profitable, but lots of people lose lots of money in markets like that. Have you considered investing in REITs? Perhaps via a mutual fund? I've been really happy with SSREX.

Personally I own one rental property that very similar to my home. It became a rental basically because we didn't have the time/inclination to sell it when we moved. It's been profitable for us, but only because it was paid off. We've had good tenants, but even good tenants will have problems. If you want to be a landlord, plan on dealing with lots of junk ranging from late payments to "what do you mean you shouldn't just pour grease down the sink?"

[Duchesse]

Tenants are trouble with a capital T. If you have some surplus money to invest, put it in a high yielding MM account and think before you leap.

[Ima saver]

I have had 3 rentals that i got for a good price, but I lost money on all 3 of them. Tenants are trouble, believe me!! I sold all three houses at a great loss. I have however, had luck on buying property and making a profit on it. Not as much as I would like, but I have made a profit. However, I live in a very profitable area. a river lot that I sold ten years ago for $22,000 is now going for $250,000, so I wish I had held onto the property.
Actually, I am now putting my cash money in the bank cause property is way too high.

[dossin1]

Rental property can be tough to make money on because it can be hard to find good tenants. My dh and I used to live across the street from a man who rented out a two-family flat. He had to evict the tenants for non-payment, and when they left, they stole the leaded-glass windows (very expensive) out of the building!! If you decide to do it, see if you can find a management company who will handle maintenance and rent collection for a monthly fee. I've heard some people have good luck going that route, since you don't have to deal directly with tenants.

[markio26]

i agree with the management company idea.. i agree with paula, rentals are headaches.. but, if you buy low to resell low, you can make alot of money... real estate is the way to go for sure...i like reits too...

[cbird01]

cschin4 please see my post at http://www.savingadvice.com/forums/s...001#post114001

90% of the advice you will get regarding this topic is negative because people only hear the bad stories. The bad stories happen because people do not understand how to select properties that will be profitable and extremely low on the "headache" scale.

I would not purchase in a depressed area, you will have headaches and there is usually less appreciation.

Low rents = Low quality renters - more headaches
High rents = High quality renters - less headaches

Real estate is a superior investment because you can leverage your money. You can invest $20,000 and use $180,000 of the banks money that you will profit from.

Real estate is an inferior investment because it requires more "hands-on" approach and time. (of which much can be hired out for a small decrease in your bottom line) Do you want to be a real estate investor or a landlord? You can choose either one.

[LuxLiving]

I wanted to be involved in real estate myself. The Hubster is dead set against being a landlord, so I've done two things, 1)buying tax lien certificates and 2)investing in REITS. Both have been profitable and EASY for me.

[debtfreeme]

what are tax lein certificates?

[LuxLiving]

Simplified nutshell: Person is behind on their house taxes, county needs to collect the revenue...you buy the certificate, county gets money to keep the paramedics rolling - streets paved, county commissioners paid, etc., the homeowner has so many days to pay it off or forfeit home. If they pay on time you get your dollars back plus interest. If they don't you get the property.

[cbird01]

Originally Posted by LuxLiving

Simplified nutshell: Person is behind on their house taxes, county needs to collect the revenue...you buy the certificate, county gets money to keep the paramedics rolling - streets paved, county commissioners paid, etc., the homeowner has so many days to pay it off or forfeit home. If they pay on time you get your dollars back plus interest. If they don't you get the property.

Did you ever get a property? Is it difficult or is there competition to buy them? I have always heard about these but never checked into it.

[disneysteve]

I don't agree with everything he says, but read "The Automatic Millionaire Homeowner" by David Bach. He gives some good basic info on how and why to invest in real estate.

[boomeyers]

I agree that the tenants are a pain.
Flipping houses is very tricky because the real estate market is depressed and even brand new homes are going for cute rate prices. Your best bet may be to look for a foreclosure in a higher end market and flip it. Even if you have to hire out a crew, find one you can trust, pay them fairly and always expect to pay 20 grand more than you think.

[cbird01]

I agree on the flipping of properties. I worked with a guy that flipped about 50 properties/year. That business is not for the faint of heart. He had it down to a science, but was so successful since he does it full time and supplied the labor himself with his full time grunts. When you have to hire a business owner(or many as often is the case), their profit often cuts majorly into yours and puts you on the brink of losing your a**. Also depends on you finding properties for well under market. (even under market price for a fix up) Can be done if you do the labor yourself...but then you are just paying yourself for your own time. I say same strategy applies to rental property as stocks...buy and hold baby.

[debtfreeme]

wow. has anyone heard of this in california??

[debtfreeme]

Check out this website: flippersintrouble.blogspot.com. These are some of the problems home owners in Sacramento are having: loosing thousands upon thousands of dollars because they estimated the market wrong. it is so sad, but good for me.