Becoming a Landlord

For those who are calling it quits from the traditional 8-to-5 world, either through retirement or downsizing, it might be worth considering a new career - that of landlord.

While being a handy-man might not fit into your traditional image of retirement, it could be a strategy that can kill several birds with one stone, especially for those who buy a small multi-family building, live in it and manage it at the same time.

$100k Duplex - 11% net cash on cash return

Owning and living in a multi-family house (a duplex or 4-plex, for example) can provide relatively predictable cash flow, the potential for price appreciation over the long term and, of course, a place for you to live. It could hold particular appeal for retirees against the uncertainty of the stock markets and the almost paltry interest rates on savings accounts.

Of course, unlike a stock, which you can just buy and pray that it does well during the market cycles, real estate is a bit more stable investment. But maintenance and business decisions will be on your shoulders.  That said, you should look at buying any investment property with the same eye toward price and expected returns as any long-term investment.

From a price perspective, this may be the best time to get into the landlord business. Low real-estate prices and the lowest interest rates in years make the cost side of the equation more favorable. Financing for smaller owner-occupied buildings is very much like a home loan; lenders will require documentation of rental income.  But that shouldn't be a problem.  The rental business has taken off over just the last year.  Rents have been on the increase across much of the country, even in places like Florida where home prices have continued to decline.  Families losing their homes to the bank (an unfortunate situation, to say the least) still need a place to live so landlords can pretty much look at long-term tenants for several years.

Also, there may be some tax benefits from being an owner/occupant because you can use part of the building as a business. This allows for deductions for things like depreciation and expenses that can be taken against rental income.

It should be mentioned that, as with any investment, there's no guarantee that when it comes time to sell you won't lose money.  While it's a long term thing, you should always keep track of the market.  This will help you decide when it's the best time to sell.  

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property?  John Breaux can be reached at johnb@southernreo.com or  +1 504-208-4331.

Buying Foreclosures - Not As Scary As You Might Think

   Buying a foreclosed or REO (Real Estate Owned) home may seem to some like a scary process, but as opposed to the waiting game played on Short Sales where the home owner is involved in the process, it's similar to buying any other home, especially if your offer is on a bank-owned property versus one sold at auction.  You need a bit of experience on those so I'd advise to stay clear of them until you've done more homework.

   There are several nuances that a potential buyer has to be aware of when dealing with a foreclosure, such as checking for liens against the title, or knowing that on a foreclosure even something as simple as cracked paint or a poorly located bathroom (some older homes have bathrooms off the kitchen, for example) can make an FHA loan impossible.  Now, a good agent, if you're using one,  will have most if not all of this information for you and can steer you to the better deals but for those willing to get their hands in the game, dealing directly with the banks might land them a bargain.  You'd be surprised at what's out there that might only need cosmetic work and be a jewel in the rough.

   Buying a foreclosed or REO property doesn't vary much from buying a home from a private owner. You write an offer to the seller, who in this case happens to be a bank, they respond to your offer and if both parties agree, you move to the closing.  That's significantly different from a Short Sale where the property is still owned by the homeowner and there's a bit of a game being played by the homeowner trying to save his credit and the bank who has no interest in preserving the owner's credit.

Here are some basics about buying properties in foreclosure.

Finding foreclosure deals in your particular area can be simple, and worth a try for first-time home buyer or those wanting to get into real estate investing.  Here are some ways of finding foreclosure listings:

• Leading real estate portals like AOL and Yahoo! have real estate sections with a separate section with foreclosure listings.
• Bank websites will list properties in their possession that are for sale.
• Asset management companies (companies hired by lenders to handle foreclosures) often offer a list of available properties.
• Real estate agents are very often appointed by the lenders to sell foreclosed homes in your area.
• Look for For Sale signs that say "REO" (Real Estate Owned property) or "Bank Owned" 
• Auction companies hold auctions regularly and sometimes sell multiple properties in a day 

   Once you've narrowed down the area in which you want to buy, get to know the properties being offered and the area values and  make an offer.  Often the bank which owns the home has already discounted the price based on a recent appraisal and the fact that it's being sold "AS IS" - without any warranties, etc. so having an inspection done, while advisable, doesn't mean you'll get the bank to do any repairs.  That said, it's not uncommon, however, to get a further discount just by asking for it.  That's a bit of equity on your side which you can use towards repairs, etc.

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property?  John Breaux can be reached at johnb@southernreo.com or +1 504-208-4331.