Posted by London on November 21, 2002 at 14:07:40:
Hello Juan,
I am far from an expert on these matters, their are some real pros on this board though, so I’ll just try to get you thinking about a few simple considerations.
1 - You say you think they could be occupied quickly, but are any of them occupied now? In my experiance’s with Income Properties I’ve needed the cash flow immediantly - but my situation is different, I bought with no money down (I was broke) so I have two notes to pay ($3,400 and $3k every month) and until those debts are settled (4 1/2 years and counting) the net profit is so thin that there is little room for error, again, that has nothing to do with your situation, I just made a mad dash to get into my first property and now I’m paying the price. The good news is that once these liens are settled I will net well over $100k each year (as opposed to the $30k I make now).
2 - I understand your point about the Billboard, I looked at a small small park that had a billboard and I thought that was pretty cool, but I didn’t then (and still don’t) have any idea what that is really worth. Enough to pay for lawn maintenace? enough to pay for garbage removal? I have no idea, and I would rather focus my energies on something I may know just a liiitle about, but then I’m not that smart a fellow either…
3 - I always thought 10% was the magic number, - If you have the cash. It is possible to buy into an Income property with no money if you bust your ass and run up a huge phone bill finding the right mix of Seller, Note Broker (or Bank, if you have more leverage than I do) and Cash Flow. Every 90% owner finance I’ve seen is at about 8% - 9%. Renovations and/or repairs may very well cost more than you think they will.
Again, don’t let my pessimisism alter your judgement, do what you want to do, it’s your money.
Best Regards,
L. xx