Originally Posted By lancerplayer:
1) Buy the home, leave it sit as is, and hold it for a few years. The market will rise over time. On the street the home is on, homes are valued 30K - 50K higher than the one I'm looking to purchase. I simply "buy low, sell high" when the market rebounds. I highly doubt the home will lose value. It's at rock bottom right now and will not go lower. In the mean time I will be paying a mortgage, insurance, and taxes, but the payment will be so low on a fixed rate, 15 year mortgage that it is not a financial burden whatsoever.
2) Buy the home, put 15K into it, and rent it out. I could charge anywhere from the range of $400 - $700 per month rent. The tenants would pay my mortgage and fill my pockets with a few hundred dollars per month. I could keep this property for life, while collecting rent. The home could be paid off very quickly using this option and once it's paid off, the rent income would be 100% profit.
3) Buy the home, put 15K into it, and sell it. Because other homes on the same street and surrounding area are valued at 30K - 50K higher, I should walk away with a nice profit. I would then have the funds from the profit to either invest or use as a down payment on a home for myself.
I would appreciate any input you have regarding the options I have. This would be my first true experience with real estate investing. All the knowledge I have learned so far have been through reading books, watching TV shows, and talking with a few mentors.
My mind is open and ready to learn from your input. I appreciate your time and help.
1. Real estate deteriorates quickly when it is not lived in;
2. This isn't reality, things break, need repair and improvements are a constant and tenants have a tendency to destroy property. Rental income is not 100% profit, that's just not how it works. A more realistic scenario is you rent it out $ 500 a month and get a $ 1000 deposit, a few months go along ok, then the water heater needs to be replaced, then the next month the sewer is stopped up because the tenant is flushing diapers and you have to call Rotorooter and that is $ 300, then the next month the kitchen sink is stopped up because the tenant dumps their bacon and hamburger grease into it, another plumbing job or bill, and the next month is something else and on and on and on. Then the tenant skips out on you and you find out your carpeting is ruined, and a few walls too, and needs to be replaced, the sewer got stopped up again and instead of calling you, they disconnect it and its dumping into the crawl space, so the whole house smells like shit. You've also got three days of work to do hauling all of their trash and junk to the dump that they abandoned and end up $ 2000 in the hole getting it ready to rent again. Welcome to the property rental business in the $ 4 - $ 700 price range;
3. You could live in this one for a while and do the same thing later, if you lose your job will making this payment suddenly become a problem?