I Like This Property But Worried About Area?
Hi,
I am looking at 2 houses in arizona. The properties will bring in about a small positive cash flow, with 100% financing, but in the area, the house values are not appreciating. I want to hold onto these properties for a while.
When holding onto a property for a long term (5-10 years) do you look at current appreciation? or do you look at cash flow?
Since I live outside the area, I do not know, or know how to find out, if the area has plans for a major redevelopment, so my purchasing decision is based on the houses only.
I look at cash flow myself some people only look at appreciation but for me I invest in areas that make me money in the rents not long term chances of the value going up.
If you are concentrating on long term then I woul look at cash flow which could possibly increase depending on what happens with interest rates. To find out more about development speak with the chamber of commerce or the city council they'll be more inclined to give you the straight scoop.
check and see how homes in the area have apprec. in the past say 10 yrs. overall they may show a long term trend of going up. do the same with rents. i would not want to buy long term if they were showing a downward term. the prop. and rents could be going down and that would not be favorable to me. if they are showing a up tend over the past few yrs. i would be more likely to buy. my guess is in the past they have increased........km
Take into factor inflation.
Property could actually be depreciating.... when it appears to be increasing in value
I concentrate on low-moderate incomes areas and I strictly look at cashflow, appreciation is gravy for my strategy. Although I do have some reserves on certain cashflow, like after seeing 4 hurricanes come through FLorida, I am wary to buy any mobile homes.
Ok, So it looks like everyone is more concerned about cash flow...
So in a low income area, without appreciation, what kind of cash flow are would you guys look for?
I won't buy a place unless it is $150 cashflow per month per unit. Example: A duplex would have to cashflow $300 a month. And this is with fixed rate mortgages, no arms or interest only payments, and with only 5% down. No shell game here
I like the $150 too. I have taken my first two at slightly less but I got back $3000 at close, 10% equity, 1st yr maintenance free, new appliances, fixed rate loan, already rented, and my total investment is $0.00.
freebee,
Since this was an old posting that got resurrected, tell us what you did.
Did you pass, or take a gamble?