That is the question I was asking myself: do I really want to buy property where there is little prospect of appreciation and the rental market is poor? I am still asking myself that.
But when I see such low prices, I also say, “Gee, I can afford houses like this. Can I make a profit with them?”
I guess what I’m really asking you is “Is there a real estate need here which could be filled profitably?”
I like the way you think – an intown gated community. I didn’t think of that. When I go back there I will have that in mind. I’ve seen those here in CA, especially up in the hills. I think there are a lot more down in Southern CA.
Yes, the local economy is very dependent upon Ft Sill. When there are lots of soldiers in training the rental market heats up. Apparently, the local folks never know ahead of time whether rumored influxes of soldiers will occur or not.
I am thinking of trying to make money with real estate in Lawton, OK. I’ve been there a couple of times and plan to go back next month. I live in Oakland, CA. Have years of experience in rental properties in low-end parts of town. Also have bought and quickly resold some properties. Know about foreclosures, probates, other bargain-buying situations.
I feel frustrated that I do not see an obvious was to work in the Lawton market. The properties are cheap there. One can buy many houses for under $50K. I have seen some duplexes which do not sell, even when offered at $10K. They are maybe 50-60 years old, but don’t look bad from the outside. They are across the street from the projects. I asked a real estate broker about that and he says they are very hard to rent.
There is a fairly high vacancy rate in the city. I don’t have statistics. But it typically takes about six weeks to two months to rent houses and apartments. Because there are so many houses, the duplexes stay vacant–renters prefer a house to having a next-wall neighbor.
I also get the impression that properties do not sell quickly – it’s not a hot buyers market. Because houses are cheap, there are lots of FHA deals and other low-down deals available. The broker tells me he can qualify almost all potential buyers for bank loans, although sometimes it takes a few months of credit-cleaning.
I am looking for suggestions of strategies that would work in this market to make money. Recognize that I would not want to move there, although I would not mind going there every couple of months for a week, if that were required.
Bud mentioned the PACTrust already, but here’s a recipe you might want to try.
Pick up as many options on the properties you describing as you can (?sounds like they’re pretty easy to get). Then run a Tax Lease ad in the newspaper, something like: "Tax Lease…Rent to Own with full income tax write-off and ownership benefits…nice 3+2 $50K Condo, only $380 p/mo + tx., ins. & HOA.? (The $380 includes your pos. CF)
Now, when they call, you say: ?Yes, I have this condo over there on Xxx street, and if you can afford the payments and the $2,500 that it’ll take to get in, I’ll just give it to you?. the only thing I hope to get out of it is to have you sell it or put it in your own name in a few years, and at that time if there’s been any appreciation I’ll just split it with you. (If they don?t want to split with you, then you ask for $5,000 up front?they?ll usually revert to option #1)
This scenario (centered on the PACTrust) will give you: cash up front; a positive cash flow along the way; much higher than normal rents; half of the loan’s principal reduction; half of any appreciation. It also gives you complete freedom from management, maintenance, collections, etc. You won’t need to come into town ever few weeks: you tenants will be your property managers.
Candidly?we love “down” markets, and down market areas (geographically). Being next to "the projects? bothers me just a little bit though?I have to admit.
I would think the subject to concept using the Pactrust would suit that market. You have a house that instead of rent you give them ownership benfits in. In a year or two they can have their credit cleaned up and do a refi. Almost no maintenance and you week there can be spent closing on the buys and the sells.
If you want to just spend surplus money it is like anywhere else. Buy multi unit properties. You figure your return with management and maintenance expenses.
That’s about what we see here in rural Texas. I’m in a much smaller town about 150 miles south of Lawton.
The houses in the bad part won’t rent nor sell for longer periods and you usually get the type of tenants that no one wants. People don’t want to live there or want people to know they live there. We have good and bad parts of town. So many of these homes just stay on the market until someone comes in with enough money to turn the whole area around with better housing.
Another part of the picture is that people don’t have very high salaries in these areas, so putting money down for a house is out of the question, unless they can pay it out.
I can still make money on the fringe of the bad parts. In other words buying on the better end of the street, fixing the house up and L/O’ing it. It does take longer than with the better properties but your still offering owner financing.
Your also in a military town. If you could buy in the better areas, I think that you could have a stream of renters from the base.
I fail to understand why you’d want to go to a place with such a soft market. Seems like Lawton is a bedroom community for Ft. Sill, and as such, will be soft until we have another war.
One possible might be to buy up several blocks and fence them in and make gated secuity complexes. Might want to go down to Houston and do some research.
Thanks for the tips. I hadn’t considered apartment houses. I’ll see what is available next time I am there. I don’t remember many apartment complexes, but I am very single family house oriented, so maybe they were there and I just ignored them. There are plenty of small houses there, that is for sure.
I think I am finally getting the concept of the PACtrust. Thanks for your suggestion.