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| Real Estate Discussions about investing, selling, and buying real estate. |
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I have a friend that is a contractor and recently built a house in a coastal town near me, he built it to sell and now that the market has taken a bit of a hit he has asked me if I would be interested in buying it for practically what it cost to build. It is a beautiful house but the area is not the best in the town but is getting slowly cleaned up and there is an ocean view from the deck off the den. I am thinking this would be a great investment but was wondering if anyone could lend some advice. This would be the first investment purchase of this size for me and I am a little nervous, is this a no-brainer or am I right to be hesitant?
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Think of it this way - would you have bought the house under any other normal circumstances?
If not, it's probably not for you. One of the big adages of property is that it's easier to sell a bad property in a good area than a good property in a bad area. And as Dru points out, we haven't even seen the bottom of the property market yet. IMO, wait till it does bottom out, then ask yourself what house you would like to buy, in what area, and how much you can afford. I think that's a far more important set of questions to ask when buying your first property, than "can I help a friend out by loading myself with the biggest debt I'll ever carry". That's just my 2c though.
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Hi Brian,
i think the biggest headache is to find out when is the bottom. |
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I believe the best time to buy is right before the market hits bottom. This way, the ball remains in the buyers court because if you try to buy when the market starts booming, the ball then goes over to the seller's court. The same goes for selling a house, which I believe is a little more difficult.
When trying to determine when the market might turn around, keep in touch with major amendments to the mortgage lending industry and pay close attention to the federal reserve. It is these items that have the most influence in borrowing power. |
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according to me its a good deal for you if you buy that house , because first advantage for you. your friend is a contractor .i think he give you the best house in cheaper rates, and you said there is an ocean view near the deck of the den.i think its a beautiful view. you don't worry about the area . its a good deal for you. i think you should go for it.
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The real estate market is still very inflated and I wouldn't buy a property right now, but if the price of the house is way below the current market prices for comparable properties in the area (30-40% below) then it might be worth having a look at the property.
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Paying cash, lessens the risk, but ties up a lot of money. It all depends on the property you buy and how you manage it. |
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I would say if you can afford the house, then do it. Yes, the housing market is depressed right now. Honestly, who knows exactly when the market will bottom out. It could be right now.
Just as investing in stocks goes, unless you know more than anyone else about when things will turn around or bottom, don't try to perfectly time the market. What's better buying a home while it's still cheap, or buying when you've waited too long and prices have already gone up? |
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Real estate is not cheap, and is actually severely overpriced. Calling real estate cheap when in many US locations prices now are still 60-70% over the prices in 2000, people have more debt that they can afford to carry, and economy is in recession is just plain wrong. |
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Take a look at what he is asking you to pay for the property, then take a look at what your income is, and then what percentage of your monthly income it will cost for you to make a monthly mortgage payment. Make sure its less than forty percent.
Then I would never invest in a property unless it could generate me a 10% profit if I had to rent it out (thats after you pay the mortgage and misc expenses). So if you notice rent for a similar property in your area is 10% or more than your monthly mortgage payments would be than I would say buy. If not, try to negotiate a deal with him. But this is a iffy situation, since he is a friend of yours. Good luck! Last edited by Natemcdo; 09-16-2008 at 05:23 AM. |
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