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

By: Wisernow

Wisernow — Wed, 18 Apr 2012 17:13:38 +0000

Before you get too far along this path check out the landlord/tenant laws in the province/state you are considering purchasing a rental property in. If you are in a region where you can’t collect a security deposit forget it. Same if you can’t kick someone out within a short period of time for non-payment of rent. You may never need these hammers, but having them in your tool kit prevents a lot of problems.

By: Gerald Nolan

Gerald Nolan — Mon, 26 Mar 2012 16:31:57 +0000

You do realize that the need for real estate is as old as the Earth, itself, and except for the Saudis, nobody is making new real estate.

By: Gerald Nolan

Gerald Nolan — Mon, 26 Mar 2012 16:25:39 +0000

Unless that raw land is ripe for commercial/residential development, actively supports agricultural purposes, or is being acquired for later donation for tax purposes to a land bank activity, you may want to think about the holding costs vs timeline for payback of investment.

By: PPot

PPot — Wed, 14 Mar 2012 10:20:07 +0000

You guys realize that this is almost 4 years old, right?

By: JK

JK — Fri, 02 Mar 2012 16:52:21 +0000

VERY BAD IDEA ! let me explain why?. first off, you need to evaluate rental as a % of investment. If you do this, it will be 2 to 3 % of the property value. & on top of all this, the base value of the house can & will go down. + tentant nuisance issues + legal problems + House maintaince costs + Property tax (i cannot in this world unstd why the hell i should pay so much to buy a house & then pay tax !) + if the house collapses for any reasons, u will be cooling your heels in Jail – LOL !!

By: Mogul

Mogul — Thu, 01 Mar 2012 00:01:31 +0000

I recommend you buy where you may want to retire or a place you visit often. Back in the early 2000s when real estate was booming I borrowed from my primary home and bought a duplex and remodeled it. I’ve had it rented out since 2005 and had great tenants and horrible tenants. Over all I’ve made money. In early 2007 I sold my primary home in Southern California and moved to Colorado. I avoided most of the downturn and the sale paid off my investment property. The duplex is in another state where my mother-in-law lives. Now when we go visit her we can also check on the rental and write off our travel and hotel expenses going to visit Mom. I also no a guy who bought his future retirement home, spent a lot of money to remodel it and rented it out for 10 years prior to retirement. He wrote off all his improvements.

By: Matt

Matt — Wed, 29 Feb 2012 03:51:51 +0000

I think buying real estate is a great idea. I have one rental property that provides steady income and I’m about to move out of my house and convert to a 2nd rental property because it will be paid off. My advice would be that if you buy a property and expect the rental income to pay the mortgage, you really need to have a downpayment of >20% to be safe. You have to plan on repairs and some damage between renters (screen them well), which can erode your profit. However, you do have new tax write offs like mileage and repair expenses that can help even out the revenue vs cost.

Another piece of advice would be to purchase raw land in an area where you believe growth will occur. For some states, the government will allow exemptions for trees, animals, farms, etc. that reduce the taxes to a much lower rate. Additionally, raw land will likely increase in value over time and is usually less maintenance than dealing with renters.

My suggestion is to have both rental property and raw acreage to provide a balanced real estate portfolio……safer than the stock market if you’re wise.

By: Daniel

Daniel — Tue, 28 Feb 2012 18:15:25 +0000

Never buy a property that you have to maintain (such as residential rental) in an area far from where you live unless you can afford a management company and unless you can afford to pay someone for repairs.

By: Daniel

Daniel — Tue, 28 Feb 2012 17:39:28 +0000

REITS work well if you want passive income. Real Estate also offers some considerable tax advantages. Between depreciation and tax deductability of mortgage and property taxes, the income you receive may be more than tax free, but be considered a tax loss (You make money, but it shows up as a loss on your taxes offsetting some of your other income). That is how some of the 1% earn millions a year, but pay no taxes. Another way into the market is by buying into a Tenant in Common. You buy a property with a number of other people and institutions. The property is rented, used, whatever for a set period of time determined before the deal takes place. The property is sold at the predetermined time (with some flexibility based on the desier of the “Owners”). Once the property is sold, the procedes are distributed to the investors.

Another way to go is a NNN income property. You buy a commercial property with a tennant in place. They have agreed to rent the place for a number of year (15, 20, 30, whatever) with a rent increase every year, 5 years, or whatever. They assume the expense of property tax, property mainenance, so on. They just send you a check for your rent. They take care of the rest.

You can also do a Land Lease. You own a piece of land and rent it to a business who builds and owns the building. At the end of the term (25 years, or whatever), the land reverts to you with the building on it. They are responsible for anything and everything on the property while they are tennents, you are responsible for the ground under the building. A key benefit here is that once they have a physical presnece, and a lond tradition in a location, they are heavily vested in renewing the lease, and now you own the building.

By: GVH

GVH — Sat, 25 Feb 2012 17:16:57 +0000

Tony – I believe I understand your reason for wanting to buy a
multiple type investment property. In your opinion, though, would some of the
same principles that go into a singular rental property be applicable to a
multiple one?… George