Any investment scenarios that make sense?

[ClintClint]

The intangibles of living at the beach are the only reasons to buy now. Until the income, replacement, and comparable sales approaches come into some alignment, informed buyers are going to be wary. If you want to rent out your property, you may be able to get a premium if you offer a lease-option to purchase. Be sure to build in the option price the accumulated loss (after tax) from the rental vs break even expenses. If you're able to build in some appreciation, that would be gravy. Rarely do renters ever exercise this option, but in the meantime you have received a premium rent.

 

[Kurt]

Problem is at the "peak" these properties were 100% overpriced.

With substantial down payments you've gotta include the missed opportunity costs of the money you put down. That $20,000 one puts down on a property is taken away from some other investment opportunity...add to that the fact that's it is being invested in a depreciating asset and it can be lost altogether in the coming months.

The trick to making money on real estate is to use none of your own money; buy into an underpriced market that is on a tear; and having the wherewithal to take your profits off the table....we all know that boat has sailed. That being said--the way to really lose money in real estate is to do the opposite.

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I guess I learned my real estate investing rules too long ago. Maybe they've changed. I still think in terms of long term. But I do understand the power of leverage. I guess in the recent past too many folks' idea of leverage was zero.

 

[AAbsolute]

Lot 2, Watersound Bridges, Jonathan Roberts

Take a look at Lot 2, Watersoound Bridges, Lakefront below 500,000. Anyone who chose could hire any builder and be in a new home on that lot for under 1,000,000 and either have positive cash flow from rental or capture a 40% return on the sale. Agree or Disagree?

BTW, It's not my property, it's a competitors, and I have nothing to gain by seeing it sold. In fact if I could raise the cash today, I'd buy it.

 

[Pirate]

I guess I learned my real estate investing rules too long ago. Maybe they've changed. I still think in terms of long term. But I do understand the power of leverage. I guess in the recent past too many folks' idea of leverage was zero.

There are properties that will cash flow if bought at the right price. I have a property I bought for 510k that did 49k rental and after expenses netted 32k. With a 80% mortgage it would profit well over 10%. I have seen a few comporable deals. Of course this is a wonderful cash return. Gulf front and an immaculate property are the keys to maximum rental.

 

[30ashopper]

There are properties that will cash flow if bought at the right price. I have a property I bought for 510k that did 49k rental and after expenses netted 32k. With a 80% mortgage it would profit well over 10%. I have seen a few comporable deals. Of course this is a wonderful cash return. Gulf front and an immaculate property are the keys to maximum rental.

I'm curious, was the net rental income 49K on average, or is that a peak in income? I've heard of numbers like this, but it's usually a one time "great year" number, not the average.

 

[30ashopper]

Take a look at Lot 2, Watersoound Bridges, Lakefront below 500,000. Anyone who chose could hire any builder and be in a new home on that lot for under 1,000,000 and either have positive cash flow from rental or capture a 40% return on the sale. Agree or Disagree?

BTW, It's not my property, it's a competitors, and I have nothing to gain by seeing it sold. In fact if I could raise the cash today, I'd buy it.

Let's see, 450K for the lot, and what, 400 sq/ft build out? That's 1.5 mil. We used to have a lot of "millionaires" around here who could afford such a place but those days are over. I think we either need to see a re-adjustment to the realities of the situation, or SoWal will have to convert to a high end, low volume sales market.

I can't predict this stuff of course, we're all just guessing. I have no idea what SoWal's market and valuations will look like in 10 years. I'm dieing to find out though.

 

[Matt J]

There are properties that will cash flow if bought at the right price. I have a property I bought for 510k that did 49k rental and after expenses netted 32k. With a 80% mortgage it would profit well over 10%. I have seen a few comporable deals. Of course this is a wonderful cash return. Gulf front and an immaculate property are the keys to maximum rental.

I'm just curious if that factors in utilities, maintenance, and long term maintenance?

 

[AAbsolute]

1,000,000 total

Let's see, 450K for the lot, and what, 400 sq/ft build out? That's 1.5 mil. We used to have a lot of "millionaires" around here who could afford such a place but those days are over. I think we either need to see a re-adjustment to the realities of the situation, or SoWal will have to convert to a high end, low volume sales market.

I can't predict this stuff of course, we're all just guessing. I have no idea what SoWal's market and valuations will look like in 10 years. I'm dieing to find out though.

Sorry I wasn't clear enough. When I said someone could hire any builder and be in a new home on that lot I meant all in. 500,000 for the lakefront lot with rare views and 500,000 for the house. Three appraisals would net 3 results 1,750,000 - 1,950,000 and 2,200,000. The quick sale would fetch 1,600,000. If I'm wrong I'm wrong, but I would bet 1,000,000 today that I am correct if I could raise the cash by tomorrow.

That's a project that would cash flow on rental and/or provide 40% return on sale.

 

[ClintClint]

If someone is quoting you 40% return on sale, walk---no run as fast as possible the other way clutching your wallet in a death grip.

 

[goofer]

Sorry I wasn't clear enough. When I said someone could hire any builder and be in a new home on that lot I meant all in. 500,000 for the lakefront lot with rare views and 500,000 for the house. Three appraisals would net 3 results 1,750,000 - 1,950,000 and 2,200,000. The quick sale would fetch 1,600,000. If I'm wrong I'm wrong, but I would bet 1,000,000 today that I am correct if I could raise the cash by tomorrow.

That's a project that would cash flow on rental and/or provide 40% return on sale.

John....how big a house could be build for 500k on that lot in Bridges ?