Today's marketplace can be defined as a target rich environment for real estate investors. There are several good opportunities in the South Florida residential market, but which is the best investment? When will the prices hit the bottom? Should I buy now or should I wait?
Those are some of the classic questions that I have heard from clients looking to buy Real Estate. Now, add in to the equation all the foreclosures, short sales, pre-foreclosures, auctions, default properties, etc. and you get the perfect recipe for not making a decision. Too much information can hurt too.
The best time to buy an investment property is when you get in front of a great deal. When that happens, grab it, secure it, lock it and take it out of the market. Don't worry too much, if you don't do it somebody else will. Somebody sharper and perhaps better prepared to identify great opportunities and seize them.
In our last blog, we talked about great deals coming from the "motivated owner" area. The "motivated owner" is our best friend. Sometimes it is best to keep it simple: Here's a text book example buying a second home or an investment home and getting a great deal in today's marketplace.
OWNER FINANCING PENTHOUSE IN SOUTH FLORIDA
ONLY $147,000 DOWN PAYMENT MOVES YOU IN
PAY NO MORTGAGE for two years! NO qualification, NO closing cost from mortgage. Best deal ever in this Buyer's market!!!
Enjoy Amazing views from the two large roof top terraces
Approximate Monthly Expenses
Taxes $485 (2007)
Maintenance $401 (2008)
***OWNER FINANCING*** $886 per month expenses.
Description:
2 bedroom / 2 bathroom 1,417 S. F. Living area. Upgraded PH W/ Marble Floors, Granite Counter-Tops In The Kitchen, Hurricane Impact Sliding Glass Doors And Floor-To-Ceiling Windows. California Closets, Lg Private Storage, 2 Covered Parking Spaces, Gated Community, Key-Access Elevator. Ref # M1202555
Property Address: 2350 NE 135th Street PH-W
North Miami, FL33181.
OK, now that we have this information, here's what I would do:
1. I would buy this property, It's owner financing, so that comes without the hassle of having to deal with a financial institution and all their new limitations due to the sub-prime financing.
2. Since the "motivated owner" is giving me an additional buyer's incentive of two year paid mortgage. I would turn around and rent the penthouse, and It will rent fast for 2,000 per month. That'll give me $24,000 per year income. Deduct agent commissions and expenses and you'll get roughly $11,000 per year. That's a $22,000 cushion.
3. I would rent it for one more year; my expenses will increase to approximately $35,000 because I would have a mortgage payment but I would still have my $24,000 rent income plus my $22,000 cushion equals $46,000. So, I would end up with a positive cash flow of $11,000.
4. In year four, my expenses are going to be $35,000 again and my income from the rent is $24,000 plus my positive cash flow balance of $11,000 totaling $35,000. Break even.
5. Now I am ready to sell this property and get an interesting return. If the property goes up only 30% in those four years I'll be doubling my initial cash investment of $147,000.
But who wants to sell it, it's a great property. Maybe you should just retire and use it as a second home with a dock space for the winter time!
Questions, comments?
Gustavo Farfan is a luxury waterfront Real Estate specialist in Miami, with over 25 years of Real Estate experience.
Currently, with Marka-Tech Associates. He can be reached at 786-200-8700 or gfarfan1@aol.com
http://activerain.com/blogs/gfarfan1
http://www.technorati.com/people/technorati/gfarfan1
http://turnberryoceancolony.blogspot.com/
http://www.immobel.com/miamicondo
http://ezinearticles.com/?The-Truth-About-Miamis-Buyers-Market&id=1092629
http://ezinearticles.com/?Selling-Your-Property-in-a-Buyers-Market&id=977548
http://www.turnberryoceancolony.com/
;)
;)
