[quote]xalfred wrote:
I am 38 just bought a house in March with my wife and it is accruing value nicely.
I am looking at a rental property. (1br condo) hoping to find a long term tenant for it or hope to do a lease to own deal on a larger 2br property.
Has anyone had experiences good or bad with lease to own deals or section 8 tenants.[/quote]
I have never done a lease option before, but I’ve read up on it. Sounds pretty good to me. If they don’t pay you evict them and keep the money. If they fufill the agreement then you’ve accomplished what you set out to do and they got into a home that they couldn’t have previously. . they can also use this experience. Plus you can write a letter of recommendation for them so they can show other lending institutions. This can help their credit score.
[quote]malonetd wrote:
Digital Chainsaw wrote:
Sir-Mix-a-Lot says one of the guys in his posse is doing well at it.
[i]Larry is the white guy
People think he’s funny
A real estate investor
Who makes a lot of money
Sir-Mix-a-Lot – Posse On Broadway
[/i]
Damn, I just saw this thread and it’s title and so badly wanted to post something about “Larry.” You beat me to it. That’s what I get for having a busy week.
[/quote]
OK, just for you, Malone, because I like ya:
[i]I’m a real estate investor,
Hard core dresser,
Money-countin’ brother,
And I hate polyester
Walkin’ in my Goretex,
Steppin’ on stats
Steel-toed boots make me do it like that
Cruise Broadway
On my cellular phone
Got a hundred-thousand dollars
On my number two home
Dog in the front yard
Fence in the back
Ex-girl gettin’ mad
'Cause my paycheck’s fat
[quote]Avoids Roids wrote:
Raw land. They aren’t making any more of it, you don’t have to deal with tenants, no maintenance, no depreciation, no hassle. But don’t forget to get a liability umbrella policy on it. It cost me $7.00 to extend my $5 million policy from my home to investment land.[/quote]
Not that I think there is ultimately a right or wrong way to invest, (different strokes for different folks), however I’d like to add to your comments for another point of view.
Not dealing with tenants equals not getting a rental income. I don’t deal with tenants, I pay a property manager to do that.
Maintenance is organised by a property manager too, yes it’s a cost but I think this should be seen as simply a cost of doing business and should be expected and planned for.
Depreciation is a GOOD thing, not a bad thing. Depreciation has meant that I haven’t had to pay income tax for the past few years. Not sure how it works in the US but here it’s counted as a deductible from your income, but obviously no money actually comes out of your pocket, thereby reducing income tax (in my case - to zero)
I see property investing as a business and as such, it has running costs just like any other business, but the income (rent) is used to cover those costs (including interest payments) and the capital growth on a house and land is generally greater than that of land alone, therefore in the longer term, wealth creation is greatly enhanced.
Roids, with respect, this is just my POV, not meant to be disagreeing with your comments at all, just adding to them.
Duke, actually I was talking about physical depreciation and not the accounting kind. However, it is accounted for in the US the same as in Australia. It is a nice tax deduction while you own the property but you must “recapture” it upon the sale of the property.
The property managers around here tend to rip you off and do very little. They charge 10% of the rental fee. That may be worth it not to deal with tenants but you essentially are giving up a lot of the upside potential in most US markets today, although there are still some that inflating at over 20% annually.
What do they charge for management fees in Australia versus the rate of appreciation?
There are probably statistics available that support your statement that occupied land appreciates faster than raw land. Personally, it doesn’t sound right to me because part of the value in an occupied property is a depreciable asset while land is not. However, as we all know, markets are not driven by ration but by passion so anything is possible.
I also should have clarifed my statement as what I consider raw land to be. I do not invest in large tracts of property but, rather, in building lots (which, based on town zoning laws, may be 10 or more acres) in relatively new/developing subdivions where there is likely to be a spike in population.
For instance, I just bought 6 acres (1 lot) in N. Stonington, Ct in a mid to high end area. The reason is that the neighboring town just voted to turn an unused state hospital over to a developer to put in the equivalent of another Universal Studios there. This should add about 4,000 jobs to an area with almost zero unemployment. They gotta live somewhere and I have just the right spot for them.
Anyway, enough rambling here. I am curious, though, about your experience with management companies down under. Maybe I’ll experiment a little bit.
I work in the Real Estate Industry in San Antonio, TX and this place has become a Hot Spot for Real Estate Investment. If you can get some property in SA do so , property value is going to sky rocket.
The reason I believe this is because
property value here is far less than most parts of the country,
2.) we have become home to many big corps (Toyota Manufacturing,Washington Mutual, CitiBank, At&T, Valero, not mention USAA, which runs a majority of there operations here, they have a complex the size of a small military base in the middle of the damn city, very impressive)
What do they charge for management fees in Australia versus the rate of appreciation?
Anyway, enough rambling here. I am curious, though, about your experience with management companies down under. Maybe I’ll experiment a little bit.[/quote]
Roids, the rental incomes I get are around 6% of the property value and I pay 7% of that in mgt fees (or 0.4% of the property value). In numbers, I pay about 9k in mgt fees against an income of around 130k, and as you’re no doubt aware, I just claim the mgt fees as an expense and reduce the taxable by the 9k.
Western Australia, the Northern Territory and Queensland are growing at various rates over 10% but the rest of Oz is dragging at just a couple of % growth and it’s even negative in 1 state this year (according to the magazines).
I don’t intend to sell my properties so the taxes from sales etc haven’t been an issue for me (yet).
Great pick up on the 6 acres, you sound like it’s going to be a bit of a cash cow when the development goes ahead.
If you’re interested in experimenting a bit down under, the market is suffering and there are quite a few bargains around right now. We seem to be at the bottom end of our cycle so some good gains are possible.
Interesting Duke. I have spent a bit of time in Brisbane, Sydney and Melbourne. Always wanted to get to Alice Springs but never made it. However, I have been burned by currency fluctuations before and stay in my own currency now. I find it improves my sleep. Howver if know you of a real cheap 2 million acre sheep station in Brumbie country, I could be persuaded to relocate.
[quote]jm85 wrote:
I work in the Real Estate Industry in San Antonio, TX and this place has become a Hot Spot for Real Estate Investment. If you can get some property in SA do so , property value is going to sky rocket.
The reason I believe this is because
property value here is far less than most parts of the country,
2.) we have become home to many big corps (Toyota Manufacturing,Washington Mutual, CitiBank, At&T, Valero, not mention USAA, which runs a majority of there operations here, they have a complex the size of a small military base in the middle of the damn city, very impressive)[/quote]
I’m actually looking at something at Marble Falls, Tx. As anyone is aware the housing market is making a much needed correction however, Texas didn’t boast the high yeilds like other states and made a more gradual climb. Texas has bragging rights in that it contains 7 of the top 30 real estate markets in the U.S. I beleive San Antonio leads the bunch.
[quote]Avoids Roids wrote:
Interesting Duke. I have spent a bit of time in Brisbane, Sydney and Melbourne. Always wanted to get to Alice Springs but never made it. However, I have been burned by currency fluctuations before and stay in my own currency now. I find it improves my sleep. Howver if know you of a real cheap 2 million acre sheep station in Brumbie country, I could be persuaded to relocate. :)[/quote]
I’ll keep an eye out for you but brumby country usually comes in lots of 5 mil acres.
