Comments on: Whether I Should Buy an Investment Property in The Current Housing Slump

By: Carissa

Carissa — Sat, 11 Feb 2012 02:13:18 +0000

Just FYI for tax purposes–any gain on the property will be allocated between the time the property was your principal residence, and the time that you owned it but did not use it as your principal residence (ie rented it). Any gain attributed to the period the property was not your principal residence is not eligible for the $250,000/$500,000 exclusion and would be taxable. For example, if you owned the property for 4 years and lived in it for 2, you would only be able to exclude half of the gain.

By: Maroon

Maroon — Wed, 08 Feb 2012 02:07:43 +0000

I love buying investment properties and I would think that when the market is in downturn is the time to buy. We have bought 6 properties in the last 10 years besides our own place, and have sold a few on, all at profit. There have been a few bad tenants, but that really only happened when we property managed those houses ourselves. Now we let the estate agents do that, and the threat of the ‘bad tenants register’ here in Australia keeps most tenants on the straight and narrow. The main things to consider in buying a property to let are: worst house in best street, it will cost less but be easily rentable; buy a house in good condition; make sure you can repay the loan if the house is untenanted for a while; buy in a popular spot. What makes a place popular can vary between being close to a large town/city, close to public transport, close to unis/schools, areas that have a good name/reputation. We all know the suburbs that don’t and if you’re not sure of a suburbs quality, check before you leap. If I was able to obtain loans in the US which I believe at the moment (feb 12) are about 0.1% I would be jumping. Our borrowing rates are around 7%+ but rents are also high. Good luck

By: Martha

Martha — Mon, 23 Jan 2012 15:20:54 +0000

Consider a vacation rental…

My husband and I have wanted to live outside the US for several years, but because his child from his previous marriage lived with us half-time, we needed to stay put. Now that child is off to college, and we have sold our house (in two days after putting it on the market). This summer we found a great apartment in Vancouver that we love, had a massive yard sale, and moved there in September. We are planning to live there half the year, which we can do as visitors/US citizens. We are fortunate in that his job in the States involves traveling and his company mandates that he work from home, wherever that is, when not traveling–they don’t really care; and I am a writer, so I can work from anywhere.

To keep a permanent address in the States, we also bought a fully furnished rental property that is our primary residence when we are there for the other half of the year in November. We found a gorgeous place with everything we wanted for a great price, and our agent saved us even more. And the best part is that it’s at the beach, in a responsibly developed resort community. We plan to rent it by the week in the spring/summer. We have a rental management company to handle most of the work, and it’s totally worth the fee. My husband is a handy guy so we take care of any major maintenance type stuff when we are there in the fall/winter. We have put away some funds to pay the mortgage until summer, when we expect to start renting and hope to save enough during the season to cover the mortgage for the following year. We are also considering renting out our apartment in Vancouver for executive stays while we are wintering.

So there are other options besides buying a house and renting it out to a single tenant for months at a time.

By: BRIAN

BRIAN — Sun, 22 Jan 2012 10:39:14 +0000

For families or individuals who have to move alot, buying a house to rent out once you move can be a great call. Like everything, it is a risk. Remember always to live below your means, what ever the bank offers, buy a house at about half that cost. This gives you flexibility for slow months. Also, a rental agency charging you 8% can be a deal, especially if you are going to be far away. Also, it insulates you against your tenants. My wife and I own 4 houses, the last one we are currently living in and the others are all rented. Make sure to keep paying down the mortgages as fast as possible while still having a nest egg for unforeseen issues.
Good luck!

By: HausZwei

HausZwei — Wed, 11 Jan 2012 20:44:11 +0000

Everyone keeps mentioning “if you have a bad tenant” It all depends on the quality of the home and how well you screen your applicants. I develop homes in “transitioning” neighborhoods that are close to walkable neighborhoods. I find a lot of young singles or couples who want to live in the neighborhoods, but can’t afford them or don’t want to live in a 1br apt and buy homes just outside those areas. I put just a tab more into the homes then the surrounding area, but make sure I keep the 1% rule. You should be able to generate at least 1% of the home in monthly rent. I’m handy, but hire subcontractors who are licensed and I make sure the home is in tip top shape. I was able to rent out my homes within 1 week, yes 1 week of putting them on the market. Because I made sure the homes are in good condition I haven’t had any 3am calls either.
Lastly, I’ve been able to buy some of the properties for less than replacement value. It’s a great time to buy and I’d buy more if I had more capital.

By: Nabeel

Nabeel — Sat, 19 Nov 2011 02:34:25 +0000

I am 26, and I recently decided to buy a property as an investment. Simply because my mortgage is affordable even if I am not able to find renters for a month of two. I fell in love with a house that I wouldn’t mind moving into. Besides liking the house, I love the area it’s in. It is in the heart of the city where everyone wants to move in. I quickly decided to make an offer. Because my mortgage is going to be half of what I can easily rent it out for. Just like everything, it is a risk. But life is about chances. This blog helped me alot because I am reading feedback from some of you and you guys are experienced and know what you are talking about. That’s why I like to listen to the pros and cons.

By: Will H.

Will H. — Mon, 18 Jul 2011 00:07:25 +0000

My wife and I think that it’s a great time to invest in real estate. We took the plunge. It will be a challenge but it should be fun. Vacancies scare us though. The other thing is bad tenants. We’ve heard stories of properties being destroyed by tenants and big money being lost. I think this is the exception.

By: Jon Kepler

Jon Kepler — Sat, 11 Jun 2011 15:07:00 +0000

@Prior Year Tax Returns – Most people have always been broke. I wouldn’t say that it has anything to do with the economy, either. For those of us who have the money though, now is a pretty good time.

By: Tom Thomas

Tom Thomas — Thu, 16 Dec 2010 23:27:45 +0000

If you have got any money left after this downturn, now is the time to wade in and gobble up as much real estate as you can get your hands on. Prices will rocket soon.

By: Tax Penalty Abatement

Tax Penalty Abatement — Thu, 18 Nov 2010 01:08:25 +0000

Time to go shopping.