All Forum Posts by: Jon Klaus

Control--you get it in REI, you don't in stocks.

In REI, you can add value to the investment with your knowledge, work, and creativity.

In stocks, those things can help you, but they can't add value to the investment itself.

Also, RE is by definition local, and therefore a less efficient market. You can become the foremost expert in a locale/market giving you an advantage over all others. That's far more difficult in stocks.

Craigslist?

There are so many ways to approach real estate investing. It really does help to focus on a single strategy to really learn and become great at it.

You say you obsess about research, so you really should narrow down your field so you don't drive yoursel crazy with too much information and too many options.

Why don't you repeat what you just did? You were successful, you now know much more, you can do even better on the next flip/rehab. Especially since there is an urgency about acting now in this time of deeply discounted properties.

Education--keep reading everything you can about your chosen specialty. Find people who are really good at it and learn from them. And do another deal. Then repeat.

Tree farm? Like growing trees for sale to the landscape industry? I have a few friends who do this. It's more a business than real estate investment, but the RE angle can be leveraged.

I'd look at the systems and make my best guess. I'd also be prepared that all have problems and factor the repairs into my offer. No power or water is common on REOs. In fact I sometimes make an offer without going inside the home. Others buy homes without even seeing them.

I have an REO offer in now on a duplex. I know what all new HVAC will cost as well as electric. If I don't have to replace all, I am that much more ahead.

After you have a contract, insist that they do turn on utilities for your inspection. Even then, they might not, but that's OK if you bought low enough.

Condo conversions typically take a multi-family property and convert each unit to individually titled units that can be bought and sold independently from one another. Ideally, a lot of equity can be created. Anyone have experience with this, residentially or even with retail or office condo conversions?

I've identified a building where this could be the highest and best use, but have no experience with it other than owning condos in the past.

If you opened your mailbox today and you received a windfall check for $100K (no tax due), how would you invest it?

Criteria:
Must be invested in real estate (or related)
Must be invested by 1/31/09
Should have a way to get back to cash by end of 2010

Ah, so many options, but here's one: Buy an empty 4-plex (or 1-2 units rented) that needs light-moderate rehab. Spend $70K for the RE and $20K-$25K on the rehab. Lease it up for $2500/mo. Collect the rent for most of the next 2 years and then sell to an investor at the end of 2009. Hopefully it sells for a cap rate of 10, bringing in $150K as well as the income in the interim.

No, I didn't finance this deal but you can finance yours.

What's your $100K deal?

"Im seeing a few $60-70k houses renting for $1300."

Very unusual. Perhaps section 8 in a 4 or 5 bedroom house, or a $70K duplex, but other than that, I haven't seen it.

"I don't really think a $70K house in Dallas would be a middle class neighborhood."

More like $125K or so, but defining middle class is elusive.

Julian, $70-80K neighborhoods tend to rent for about $800-950/mo in this area. A sweeter spot for income might be a $45K home that would rent for $650 or even $900 under section 8.

As far as neighborhoods, yes there is a huge difference. We have war zones like any other big city and that is not where you want to be. Even if it cash flows well, you have trouble attracting and keeping good tenants.

We also have working class areas with little violent crime. Garland or Arlington for example.

Also TX population and job growth remain healthier than most other parts of the US. And TX law prohibits home equity loans greater than 80% of appraised value. That has kept the market more stable.