All Forum Posts by: Susan Maneck

 Be really careful. I've been contacted by a number of investors who loaned money at that rate for investments in Mississippi. The company apparently went bankrupt and the problem is that they loaned more money for these properties than they turned out to be worth. 

I didn't start real estate investing until I was 55 but my son, who is still in his twenties, just closed on his third house. My son graduated in the heart of the recession and had trouble finding regular work, but he managed to support himself by tutoring. He was still living with me in south Jackson but all his clients were up north and he was spending a lot of money commuting back and forth. . I found him a 3bdrm 1ba HUD house in north Jackson for 23K which I financed. Then he fell in love and wanted to get married. At that point he no longer considered the house he was living in suitable for his bride-to-be nor was working part time sufficient income . So he found a regular job and bought a house on the NE part of Jackson in a better neighborhood and rented out his old house. When his wife realized the rent on the old house was paying both mortgages she started to get excited about real estate investing. So they refinanced the first house, paid me off (thank you) and then used the remainder as a down payment on their third house. Their strategy is a bit different than mine. I buy in what i would call C- neighborhoods, paying cash for houses in the 30-35K range, then get a Heloc a year later to use on buying another house. My son, on the other hand, is buying more expensive properties (around 60K) in B neighborhoods which he leverages with conventional mortgages.

I don't know about other states in the South but we certainly don't have a 0.3% tax rate here in Mississippi. I pay $1700 a year in taxes on houses I paid only 35K for.  Keep in mind we have to support our schools with houses that are worth a fraction of what they cost in California. 

As someone used to getting 2-3% on sub 40K houses I would have to agree. It is not likely to work if you live out-of-state. I've seen too many people from California buying so-called "turnkey" properties here who end up paying twice what that property will sell for in that neighborhood. The rent may look good (and usually is) but there is no exit strategy for a property in West Jackson which cost you more than 50K. 

I have a question regarding the Fannie Mae restrictions on the number of mortgages. Two of my houses are financed by first place HELOCs.  Would those count towards the four they want to allow? 

I think you would be hard-pressed to find a higher higher yield value on real estate than Jackson, MS. Foreclosure rate is still 10% which makes the properties ridiculously cheap. You can buy a 3bdrm 2ba house with a two car garage on a quarter of an acre lot for 30-35K and rent it for $850. 

Except for the fact that you have to live next to them, I think you will find that Section 8 tenants are much less of a hassle. Since HUD is paying the rent they never feel like you are charging them too much and they are less likely to move out.

That is probably true for Washington but not for a lot of areas in the South. I think you can find houses that are already rented for less than 40K here in Jackson, Mississippi. I typically buy a house for 30-35K and maybe spend up to 5K with the rehab (doing none of the work myself.) Yeah, I pay cash but then get a HELOC after I've owned it for a year which usually gives me enough money to buy another house. As for exit strategy, the reason houses are still cheap here is that we were late going into recession because our houses were never overpriced and we are later still coming out of it. The foreclosure rate here is still 10% while it is 1.5% in the rest of the country. But I'm persuaded it will come back. Rents are high and a new factory is being built. Even if I can't sell my property the rents are so good I don't think I can lose. A house which cost me 30K rents for $850 or more. Atlanta is another matter. Houses are relatively expensive there.

I think it does and property owned is in Mississippi. 

My mother who lives in California set up her LLC in Mississippi for precisely that reason. She needed an LCC even though she only owns one investment property because it is held in a self-directed IRA which requires an LLC.