Real Estate

jamesmith

Have been quite busy lately, I purchased my first investment property.
The interest rate is pretty good right now, so I decided to take advantage of the low rate environment and take a leveraged position and buy a house. The estimated the return is around 7% to 11% annually excluding appreciation/depreciation, actual return will be depending on if I can find good stable tenants and depending on maintenance cost...
I also see this as a long term short position on USD. Or I can call it an interest rate swap, I am selling fixed interest rate and getting a variable rate of return...

The property is in excellent shape, it doesn't need any renovation. It's in a above average location, and it doesn't satisfy the 1% rule. It is estimated from 1.18 to 1.25%% instead.
I have read the 1% rule a lot, if you don't know what it means: it's a shortcut to calculate if the property is a good investment. Estimate the monthly rent and multiply it by 100. That gives you the price you should pay for the house...
I have looked around my area, it is very rate to have houses that satisfy the 1% rule. The ones do satisfy are in very bad neighborhoods. The chances of getting a bad tenant is much higher in bad neighborhoods, possibly have higher maintenance cost and would require more time. As a newbie in RE, I sure don't want to deal with these.

I am new to the RE world. I am sure there are experts in hutong, please share your experiences :)

天地

gongxigongxi to you, the new proud landlord!

are there any photos to share?

above 10% annual return is very good. where is it and I want to go and take a look:

SFH or condo?

源济

恭喜！恭喜！

天地

Your caprate range is acceptable on paper, in reality,  there are many variances having impact on the return, the most important factor in your case seems to be the tenant quality - whether they pay rent timely and care your house, if your property is in good condition and the cost of repair and maintenance would be relatively low and easy to take care of, especially if you are handy and have time to DIY.

contr

Where is it?

jamesmith

天地 发表于 2012-12-10 11:50 AM
gongxigongxi to you, the new proud landlord!

are there any photos to share?

Thank you :)
It is a multi-family house in Greater Boston. Are you from this area?

jamesmith

contr 发表于 2012-12-10 03:46 PM
Where is it?

Its in Greater Boston.

jamesmith

天地 发表于 2012-12-10 03:01 PM
Your caprate range is acceptable on paper, in reality,  there are many variances having impact on th ...

Thanks for sharing :)
seems like I missed the best time to buy cheap houses in 2009, 2010...I heard there are lots of good deals back then.

I also think that having good tenants are more important than trying to satisfy 1% rule...the house is in very good shape, I certainly don't want bad tenants to damage the house.
I am not very handy, but I can learn...I found youtube to be a great source for DIY lessons...

Heaven and Earth MM is experienced in RE? Love you hear your experience when you have time to write about them.
I would like to have more discussion in Value Investing Club. Paying a reasonable price for value is essential in all kinds of investment :)

天地

no need to look back from the rear mirror with regret, typical buyers remorse

I am not very experienced but as a little landlord myself I know from practice that responsible tenants are crucial to the return on investment. Heard many good and bad stories about tenants and we must be prudent in tenants screening.  In this business we all learn hands-on until the property is eventually sold... It is a long journey after the house is ready to rent and thereafter the first step is to find a good tenant (responsible, stable (best 2-3 year lease);  it may take a while to find a good renter but never rush into signing the lease - rather late than sorry.

Youtube is an excellent place to find help and learn almost on every topic of DIY project, it is such a great helping tool and best of all it is free

天地

jamesmith 发表于 2012-12-10 04:10 PM
Thank you :)
It is a multi-family house in Greater Boston. Are you from this area?

unfortunately not in your area... but would love to view the pictures of the property you bought.

contr

jamesmith 发表于 2012-12-10 04:11 PM
Its in Greater Boston.

Too far

天地

"KK手记 What is DIY project? Pls introduce your experience. "

Here is a very practical example of DIY (do it yourself)

jamesmith

天地 发表于 2012-12-25 03:20 AM
本帖最后由 天地 于 2012-12-25 03:25 AM 编辑 "KK手记  What is DIY project? Pls introduce your experi ...

Happy New Year
I rented the property out :)
Tenant pays for all utilities. Purchase price / month rent = 126.67....or 0.79%
tax and insurance is roughly two month rent...

天地

jamesmith 发表于 2012-12-31 12:25 PM
Happy New Year
I rented the property out :)
Tenant pays for all utilities. Purchase price / mon ...

牛, 真牛, 太牛了
每月收钱数钱是今后的主要工作.
恭喜发财,very good return, about 9%, 很厉害. 10年后再增值一倍, OMG!

jamesmith

Lost electricity for about 22 hours during Snow storm Nemo. Got 30+ inches of snow and neighbor's tree fall down and hit my garage, caused slight damage.
From googling, I found that neighbor's not at fault if it is caused by storm, so my insurance should cover my house.
Insurance companies insuring Northeast must be having lots of headaches, we had Sandy earlier, now we found Nemo. I wonder if Nemo is a female name? Usually we call big and troublesome storms female names, and small, easy ones male name. Maybe when girls got angry, it's like having a storm :D

I wonder if there's any local insurance companies with a competitive edge, but troubled with recent problems depressing share price.

lilitulip

jamesmith 发表于 2013-2-11 08:50 AM
Lost electricity for about 22 hours during Snow storm Nemo. Got 30+ inches of snow and neighbor's tr ...

Hi James,

If you are under mortgage for your own home, what is the income requirement to get the 2nd home as investment property?

thanks

jamesmith

lilitulip 发表于 2013-2-12 12:32 PM
Hi James,

If you are under mortgage for your own home, what is the income requirement to get th ...

Hi, I am a newbie in RE investments...it's better to consult a real loan officer from a bank.

From my limited experience, they look at all your  (total monthly payment  / income before tax). This ratio is obviously lower the better. They also look at loan to value ratio (how much you are borrowing and how much the house is worth...) , and  6 months monthly payment reserve in the bank.
Since it is a investment property, they can use part of the future rental income as your income before tax when processing the loan.

Someone told me about blanket loans the other day, you can ask about that as well... http://en.wikipedia.org/wiki/Blanket_loan