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  • Real Estate Question

    OK, so I purchased some property in Coffee County, GA about 6 years ago though the pressure of my parents. They (actually my father) told me it would be a good investment because property value always goes up but that does not seem to be the case in today's market. Yes, I was naive, fresh out of high school and employed, so I thought "what the heck?". After all, he was my father, and father knows best, right? (At least that's what they say).

    Anyway, I want to find out if I made a good or bad investment and how to go about getting an expert appraisal done as I have no idea how much the property is worth.

    More info if needed:
    Lot price: $11,500
    Acre: approximately 0.75
    City: Ambrose, GA (31512)
    Balance Owed: $9,500 (very low monthly payments)
    Interest rate: 14%

    Truth is, I can afford to pay it all off really soon. However, it's not something I want to put extra money into if it is indeed a bad investment. I would rather use the $9,500 towards the downpayment of my first home?

    Any help is much appreciated.

    Thanks in advance for your replies!

  • #2
    Sorry, if I posted this thread in the wrong forum. This sounds more of a personal finance topic than investing. Oops!

    Comment


    • #3
      I would pay the sucker off to get rid of the 14% interest rate! But hopefully a more experienced person will come along to help you.

      Comment


      • #4
        Yes, I know. The interest rate is killing me! The only reason I chose not to pay it sooner is because I really don't think it's a good investment and want to use the payoff balance towards getting a new home in a different area, particularly in my local area which is near Miami, FL.

        The company that sold me the property is willing to take it back if I decide not to keep it. The loan is not reported to any of the credit bureaus, so I don't believe my credit will be affected if I decide I no longer want the property.

        I just want to get an professional appraisal to see whether I should sell or give it up all together.

        Comment


        • #5
          Originally posted by moneymatters View Post
          Yes, I know. The interest rate is killing me! The only reason I chose not to pay it sooner is because I really don't think it's a good investment and want to use the payoff balance towards getting a new home in a different area, particularly in my local area which is near Miami, FL.

          The company that sold me the property is willing to take it back if I decide not to keep it. The loan is not reported to any of the credit bureaus, so I don't believe my credit will be affected if I decide I no longer want the property.

          I just want to get an professional appraisal to see whether I should sell or give it up all together.
          moneymatters,
          How much money are you paying in interest each year? (I don't know how long your financed the loan--If you have say 10 years left for the remaining 9,500 at 14%, the mortgage calculator has 1300 interest in the next 12 months.. and a total of 8200 calculated over 10 years...)
          How much are you paying in taxes each year?

          If you obtained a professional appraisal, how much would it cost relative to the value of the property?

          What do you plan to do with the property?

          If you sold it, how much would the commission be?

          If the company "takes it back", would you be doing a quit claim on the deed or something else?

          Comment


          • #6
            If you pay it off, you spend $9,500. Then to sell it, you pay appx. 4% commission on both ends, so 8% of selling. In todays market you're going to get stuck with closing costs too more than likely, so another $3,000+ easily. Therefore, paying it off and selling it with a sale price of $15,000 is going to cost you $13,700. Realty fees of $1,200, closing of $3,000, and the pay off price of $9,500. You'll see $1,300 in profit from a sale in the instance. Meaning, to break even, you cannot sell this property for less than $13,700. That's not even factoring in the price of a professional appraisal, which can usually be had for about $250. In order to get out of this property without incurring further debt, you need an appraisal price of $14,000. Or you get it in writing that you can give it back to the company who you bough it from and it not go on your credit report, and go that route. Much less hassle, and you stop the bleeding of a 14% interest rate.

            Comment


            • #7
              Originally posted by Like2Plan View Post
              moneymatters,
              How much money are you paying in interest each year? (I don't know how long your financed the loan--If you have say 10 years left for the remaining 9,500 at 14%, the mortgage calculator has 1300 interest in the next 12 months.. and a total of 8200 calculated over 10 years...)
              How much are you paying in taxes each year?

              If you obtained a professional appraisal, how much would it cost relative to the value of the property?

              What do you plan to do with the property?

              If you sold it, how much would the commission be?

              If the company "takes it back", would you be doing a quit claim on the deed or something else?
              I am currently paying 14% annually on the property. According to my contract the last payment is due 11/23/2023. Taxes on the property are between $175-$225 per year. Unfortunately, I don't know much about property appraisals and don't know how much the property is worth. I am trying to find out myself.

              When I bought the property, my plan was to either build a single-family home or have my uncle build a trailer/mobile home to put on it because I plan to move to GA within the next 2 years. However, I'm thinking about living in another area now.

              Don't know how much commission would be. If I decide to forfeit the property, I would be quitting the claim on the deed.

              Comment


              • #8
                Originally posted by swanson719 View Post
                If you pay it off, you spend $9,500. Then to sell it, you pay appx. 4% commission on both ends, so 8% of selling. In todays market you're going to get stuck with closing costs too more than likely, so another $3,000+ easily. Therefore, paying it off and selling it with a sale price of $15,000 is going to cost you $13,700. Realty fees of $1,200, closing of $3,000, and the pay off price of $9,500. You'll see $1,300 in profit from a sale in the instance. Meaning, to break even, you cannot sell this property for less than $13,700. That's not even factoring in the price of a professional appraisal, which can usually be had for about $250. In order to get out of this property without incurring further debt, you need an appraisal price of $14,000. Or you get it in writing that you can give it back to the company who you bough it from and it not go on your credit report, and go that route. Much less hassle, and you stop the bleeding of a 14% interest rate.
                Thanks for the info, swanson719. I think I will go ahead and have the company take it back the lot rather than trying to pay it off, sell it, and lose more money in end.

                Comment


                • #9
                  You can't touch a lot around here for less than $25,000. However the interest rate is very bad. ( I live in ga.)

                  Comment


                  • #10
                    I would take this question to this site before you make any rash decision.



                    Real Estate Investing Forums | BiggerPockets.com

                    Comment


                    • #11
                      The best thing is that if you can afford it then better pay it off and get out of the current debt and heavy interest.

                      Real estate is not doing good currently but that will not be a situation forever. You could get a good return a few year from now when everything gets normal again.

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