The Real Estate Tycoon

We officially closed on the property and are currently waiting to receive the final documents. The county has already updated the information and it feels good to see our name on the property appraisers website. We were able to acquire the lot for approx. $2400 incl. all fees and taxes. As promised, here’s a detailed breakdown:

• Sales price: $350
• Closing services / abstract fee: $225
• Owner’s policy: $100
• Record Deed / Documentary stamps: $13
• Property taxes owed: $1725

Total: $2413

We will try to sell the lot for a quick profit (which we could use for our first rehab project). Considering the current market situation we might have to hang on to it for another 6 – 12 months. Who knows, maybe we’ll build on it ourselves. We’ll see.

William and I are still in the process of working full-time and putting as much money into our savings accounts as possible. At the same time we’re looking at ways to finance our first renovation project. We have already secured several lines of credit, but are still lacking a few thousand dollars.

I hope everyone had a great Easter.

Chris

Good news! We got in touch with the county tax collector and found out that the amount of back taxes owed are roughly $1700. After one day of negotiations we were able to get the lot under contract under the following terms:

We…

• pay all closing fees (estimate: $300)
• take care of approx. $1700 in back owed taxes
• pay the current owner $350

That’s right. We were able to negotiate the price from $5000 down to $350. Considering taxes and closing costs we should be able to acquire this property for about $2300 – $2400. Not bad considering the current market value of $25.000 (according to the county property appraiser).

The contract has already been signed (via fax) and we are currently waiting on news from the title company. We hope to finalize the deal within the next week. Once we have exact numbers I will be back with a detailed break-down.

Good weekend everyone,

Chris

Although it was not part of our initial plan to acquire vacant land, we stumbled upon an online ad, which raised our interest. The lot measures approx. 7000 square feet and is zoned by the county as ‘multi-family’. The property overlooks a golf course. We have not seen it ourselves, since it’s about two hours north of us. The only problem seems to be, that the property is landlocked, which means that in order to access it we would have to cross someone else’s property. Between the lot and the public road are just a few condo units with a paved driveway in between, which could be used to get access to the land.

Here’s a picture of the lot:

Now here’s the interesting part: We have been in touch with the seller, who seems very desperate to sell. The current value of the lot – according to the county property appraiser – is $25.000. After doing a little research we found out that the current owner has not paid any taxes since 2007. The property is currently listed for $5000 and we’re thinking about submitting an offer.

Stay tuned; we’ll keep you up-to-date.

Chris

Before we go out looking for our first investment property, we should talk about the various investment options residential real estate has to offer. Generally, rental property can be split into two different categories:

• Residential
• Commercial

Most residential properties are single-family-homes (often referred to as SFH); the advantages are obvious:

• Familiarity; most of us have either lived or even owned a single-family-home
• The supply is tremendous
• Ability to compare one house with others in the surrounding area for value evaluations
• Very liquid (high demand)

Any duplex, triplex, or 4-plex falls into this category as well Continue reading

With more and more Americans facing negative equity – that means owing more than their homes are worth, the amount of people who just walk away from their properties is increasing at an alarming rate. While most delinquent home owners are simply out of money, a new wave of people just mail their keys back to the lender (a phenomenon often referred to as ‘jingle-mail’), even though they have the capacity to keep paying. As an example, just recently New Yorkers saw the landlords of an 11.000-unit apartment complex shamelessly walking away, deeply underwater with their investment, creating the biggest foreclosure in the history of the United States. According to a recent study developed by the credit bureau TransUnion,

the percentage of consumers current on credit cards and delinquent on mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on credit cards in the first quarter of 2008.

But what exactly does that mean?

Traditionally, consumers faced with financial hardship Continue reading