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Help me become a slumlord

Old 05-02-05, 02:15 PM
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Help me become a slumlord

I've tossed the idea around of using some excess cash to invest in some real estate property. I'm more interested in buying property in hot real estate markets rather than investing in something locally.

I was thinking that I could hire a professional management company to do all of the servicing of the apartment (like if something breaks down, etc) and pay them a certain % of rent.

Has anybody had any experience in this? Share any tips? Do I have to put down 20% or will 10% do?
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Old 05-02-05, 02:19 PM
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paging kvrdave
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Old 05-02-05, 02:21 PM
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Moving to the Low Rent Forum, moderated by Kvrdave.
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Old 05-02-05, 03:18 PM
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Old 05-02-05, 03:23 PM
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Originally Posted by Nazgul
Moving to the Low Rent Forum, moderated by Kvrdave.


We have several investors from CA that have bought things here and we manage them. They just make money.
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Old 05-02-05, 03:50 PM
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I would not consider capital appreciation a good goal to have if you're buying property now. Rather, look at cash flow, and establishing a positive one. Management companies will take varying %s of $ depending on what they do.

Something you probably want to do is talk to your tax specialist about setting up a company to maximize your tax benefits.
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Old 05-02-05, 03:52 PM
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Incorporate yourself. Have your relatives work.
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Old 05-02-05, 04:16 PM
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Originally Posted by kvrdave


We have several investors from CA that have bought things here and we manage them. They just make money.
hmmm...maybe i could buy some true slumlord property in kvrdave-land.
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Old 05-02-05, 04:30 PM
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Originally Posted by ChiTownAbs, Inc
hmmm...maybe i could buy some true slumlord property in kvrdave-land.
We could walk around town with our bats, saying stuff like, "Rent goin' up, boy!" and "Your choice, grandma, pills or a roof over your head."

This'll be great!
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Old 05-02-05, 04:42 PM
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Most new home communities in AZ are now adding stipulations to the sales contract that prevents this from happen. With the upswing of AZ real estate in the past 2 - 3 years, tons of out of state investors came in and swooped up alot of the new homes. It's partially what has driven the market to such extreme highs.
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Old 05-02-05, 04:45 PM
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That sounds like a bubble waiting to burst.
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Old 05-02-05, 05:17 PM
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Originally Posted by kvrdave
That sounds like a bubble waiting to burst.
I don't think it'll burst, but it will most certainly cool off over the next year or so.
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Old 05-02-05, 07:09 PM
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You should buy something around my neighborhood. We have like a billion of those damn row-houses going up everywhere. They tore down a church, a church for God's sake! to put up more of those damn things. They're everywhere, man....everywhere....
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Old 05-03-05, 07:43 AM
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Originally Posted by Deftones
I don't think it'll burst, but it will most certainly cool off over the next year or so.
Well, if you ask me, and I am in real estate (on the finance side), I think there is a bubble. We're hearing the same things people were saying in 1998:

"Oh my stock/home doesn't need to earn money, I will make that money from capital appreciation."

"Are you kidding me? Internet/real estate is changing everything!"

Then you've got situations were people are taking extremely short-term ARMs, negative amortization loans, and/or interest only loans to be able to afford a home. While this isn't a problem per se for a primary home, and I encourage homebuyers who are likely to move to look into those options, it creates a wholly different issue in homes for investment.

The main reason we will not see a widespread housing crash in the U.S. is because for prices to fall everywhere, people have to be selling everywhere. That includes people's primary homes. I'm sorry, but if the price of homes in my neighborhood drop $20,000 I am not likely to move. HOWEVER, investors don't have any problem liquidating/selling those properties, since they don't live there. And if an economic slowdown hits and you need to sell, you will liquidate at any price above the amount you've financed.

So, my recommendation is to stay out of areas filled with investors. That is where you may see a sudden drop in prices. If you're a homebuyer, don't despair. Find a home you like at a price you're willing to pay, and stick around for the next couple of years. You should be fine.
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Old 05-03-05, 08:23 AM
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Originally Posted by kvrdave
We could walk around town with our bats, saying stuff like, "Rent goin' up, boy!" and "Your choice, grandma, pills or a roof over your head."
Especially if you do it while dressed as Klingons.
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Old 05-03-05, 08:49 AM
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Originally Posted by The Bus
HOWEVER, investors don't have any problem liquidating/selling those properties, since they don't live there. And if an economic slowdown hits and you need to sell, you will liquidate at any price above the amount you've financed.
I'd agree with this with one addition. If you need to sell, you will liquidate at any price (of course at the highest price you can get) - even if it's below the amount you've financed

If you owe 100K on a property worth 100K, but noone is interested, then it might be worth flogging it off for 85 or 90K and accepting the loss out of your own pocket. Especially if NEXT year, it will be worth that 85 or 90K and your loan has ballooned out to >100K.

Of course, smart investors will get out before the price goes below what they've financed, but sometimes even the smartest ones get caught with dogs.
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Old 05-03-05, 09:25 AM
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Originally Posted by kvrdave


We have several investors from CA that have bought things here and we manage them. They just make money.
i want to make money. will you manage my slums?
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Old 05-03-05, 09:49 AM
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Originally Posted by naughty jonny
If you owe 100K on a property worth 100K, but noone is interested,
Then it's not worth 100k.
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Old 05-03-05, 11:22 AM
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Originally Posted by wendersfan
Especially if you do it while dressed as Klingons.

That would be so COOL!!!!
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Old 05-03-05, 11:27 AM
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Originally Posted by Venusian
i want to make money. will you manage my slums?

Of course. The first lesson in owning slums is giving them a new image which is as easy as a new name. A buddy of mine owns an old motel. A true slum. A read crap heap. He basically rents to people who are down on their luck, no job, etc. So naturally, the first name was The King Motel. But that didn't quite have the total change we were looking for. So now it is The King Manor.

Sure, his renters still suck, and the place is still a heap, but imagine the pride in owning "The King Manor." There are some things money can't buy.....
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Old 05-03-05, 12:10 PM
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(paraphrased from a friend): "People always add the word 'Estates' when you need to gussy up a bad neighborhood. For example, say your neighborhood floods a lot... Call it Highwater Estates -- has a nice ring to it."
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