All Forum Posts by: Jennifer Cornforth

Hi guys, I have a quandary.

For my next real estate investment, I'd planned to purchase another condo in a complex with the husband and I already own. We have a short term rental there that is doing great, so we were going to double down. However, I've started to think about buying land further away instead, and then building several rentals on the land. (I live in Hawaii. And my island is extremely limited in what you can do for short term rentals. I'd be buying land elsewhere, where I could build and rent more freely.)

From a pure numbers perspective, buying 3 condos over the next few years makes more sense that buying 3 acres of cheap land and building 3 small rentals on the land. It's possible I'm overestimating building costs and underestimating what I could get for rent. But even so—I think condos are a better bet in the short-to-medium term. But.... I really like the idea of buying actual land.

We live on a half-acre, and we own a townhouse and condo we rent out. But maybe it's the Zombie-apocalypse prepper in me, but I like the idea of having something in our portfolio that's actual property, rather than just structures that will disintegrate over time.

Am I crazy for wanting to make the less lucrative investment? Or is the purchase of well-located land a good longer-term investment (like 20 years) and I'll be glad I have it in our portfolio?

Look forward to reading your responses.

 Yeah, norms vary depending on where you are in the country, but most decent realtors won't let their clients list things for far more money than the property is worth. In cases where I've seen houses listed for way more than any sane person would pay, I've been especially hesitant to get involved. I figure that either the owner or the agent are delusional. Best to let them figure it out on their own and drop the price. THEN, once there's been a price drop, you can come in still lower. But I'm very gunshy—I never want to buy a property unless I feel that other people would also want to buy it. Because if I ever wanted to sell it, especially sell it fast, it needs to be a property that's desirable.

Back in Seattle, there were always great deals on houses along major roads and at busy corners. One could have put in a lowball offer and maybe even get accepted. But then *I* would be stuck with a property I couldn't unload. 

Anyway, that's my uber conservative take on it. But as a comment or pointed out above, I'I've only ever bought in hot or stubborn markets. I don't know what goes on in the middle of the country. :)

@jason v. : Ah, yeah. I've only bought in either hot markets or vacation areas where people either refuse to go down in price or cant afford to. 4 properties i got in seattle, where either the market was hopping, or people were underwater and it was a short sale so the price wasn't all that negotiable. Here in HI where i live now, I don't really understand the market very well. Properties routinely sit on the market for a year or longer—and yet sellers dont go down on price. Worse—they try to sell stuff without staging, which to me seems crazy. LOL. :)

No one can afford to leave properties empty on hawaii, except the mega rich who dont really care much whether they sell or not. It would take another housing collapse to get people to sell for much below asking.

That said, i dont know this market like I knew Seattle. Maybe I'll find some surprises!

I've only bought 6 properties so far, but what I've seen from many years of watching real estate is that if you dont start with a reasonable offer, the deal isn't going to go anywhere. We're not haggling for the price of a t-shirt or a cab ride where someone can ask $50 and you counter with $25. Usually, owners do a lot of research before putting something on the market and they know how much they want (need) to get on the sale.

I feel like it's safe to offer 10% below asking. 20% below asking may be dismissed as an insult. We have to consider the human element. Of course, if you dont really want the property, it's fine to offer as low as you want. But that's like going into a night club and propositioning every woman there—try it enough times and someone may say yes! But if it's a property you actually want, it's best to start somewhere not so far from asking that it will be dismissed out of hand.

I'm fairly new to the REI game, but I feel that real estate is like surfing—you need to enjoy the sucky parts if you want to get good enough to enjoy the great parts. Personally, I think people tell fairy tails about both the stock market and real estate. Personally, I like real estate, and i was going to open houses and running numbers on properties for many years before we decided to buy an investment property on purpose. (We bought a couple on accident. LOL. But thats a different story.)

5% cap rate is pretty typical in a lot of cities. I'm happy to get 8% on my current properties, especially since my Seattle one is going up in value. But as for the idea of getting 7% on stocks with zero effort—hahahaha. I've had money in the stock market forever and I've never seen that kind of return.

It's all about doing the math. What are you borrowing at, and what can you rent it (or sell it) for? Pie in the sky stories are lovely, but I'm a conservative person by nature. I'd rather a guaranteed 8% than a risky 15%. Unless it's a flip situation. I don't think I'd flip a house unless I was sure of making a ton of money. But that comes down to the market. Some markets are great for flipping and some suck. And if you want to invest close to home, flipping isn't always an option.

Thanks for the info! It reminds me to be glad we are holding onto our property in Seattle. :)

If i still lived there, I would totally be looking to buy something in Tacoma. They are opening or have opened a new branch of UW there, and they put in light rail to accommodate those students. It's a great area for growth!

Hi there,

I'm new to this forum. My husband and I just bought and started renting out our second property (besides our home) and I'd like to buy one more property this year. But the thing is that although we own all our properties outright (no mortgages) we got a loan this past June. Though we paid it off within a few months (the loan was to finance a move), it's still on our record. Not only that, but we'd sort of done a loan application the fall before last—when we bought our first rental property. It got denied, if I recall, but we didn't care because we had cash.

Anyway, to the banks, it looks like we've been running around asking for money. In reality, we own 3 properties outright and haven't had so much as a late credit card payment in 20 years. Borrowing is a massive hassle for us for reasons I don't want to get into. I WISH i could fast forward to 1.5-2 years from now when we can count our rental income as "income" for tax purposes.

My question is, how long should i wait at this point to apply for a loan from a bank? We have one aborted application from Nov 2015, one heloc from Jun 2016 paid off in October 2016. Should i wait until June 2017? Wait until we have 2 years of rental income on our taxes? Or look for alternate financing? 

I'm in Hawaii, if that makes any difference. :)

Thanks in advance for your advice!

Jen