I own a home currently valued at app 330,000 with no mortgage owing on it. I am 37 years old, married with two small children with dual incomes that would be considered upper middle class.

We have an opportunity to build a home in the MOST prestigous area of our city where house values can be over a million dollars and certainly you can't get in for under 500,000 and can possibly do it for app 450,000 (incl land)(husband has some strong contractor connections) (we have one of the lowest housing rates in the country)

We would again incur a mortgage of app. 130,000 plus about 30,000 in cash paid out to sub contracters along the way-Is this a long term solid investment. Would it be wise to invest in other areas rather then real estate.

Thanks

No responce from Pros? I heard form the news that USA house market is sliding now. So, I doubt if it is the right time to buy a house. Anyway, 450,000 doesn't hit me when comparing with my country, the so called developing country.

Right now Nadia your money is doing nothing sitting in your house.It's not bringing a return other than appreciation and your not able to write off mortgage interest to lower your tax base(It might be different in Canada but that's how it is in the U.S).

With that kind of money instead of buying a bigger house to impress people in a posh location why not invest in rentals and foreclosures?Build up a revenue generating machine and grow a portfolio of real estate wealth by buying and selling properties(land,houses.commercial,etc.)

I don't think acquiring anothe rmortgage to impress people is the way to go and I also don't like the idea of having all your real estate holdings as one property.If you are invested in different sectors of real estate it's just like stocks.Instead of having one tanking if you own multiples some will be doing ok and some will be doing great causing on average you to have a portfolio with a great return overall(if the right decisions are made)

No legal advice

so super do you just by and sell the foreclosures? If so are you financing them? I'm reading alot about investing and just trying to get ideas in my head for later.

It depends on the situation.

I list the pre-foreclosures,usually most of them have no equity so they become short sales.If the house is really damaged the bank will offload it for a good cash price.

If the house needs minimal repairs you are looking at getting the house at 75 to 80 percent of value with all the resale costs involved in a flip that won't work.In that case I market the property to regular homebuyers who would love to buy 20 percent below value and also to investors looking to do rentals.You just have to make sure the area you are in cash flows for rentals compared to the average sales price,otherwise you will just be doing flips in that area.


Try to stay away from hard money loans as they will eat up all of your profit.With investor loans tightening even with good credit a 100 percent loan is around 14 percent it is cheaper to find a silent money partner for say a 10 percent return ont here money or you could set the deal up as they provide the cash,you do the work and you split the profit 50/50.

Everything would need to be in writing and I would have a neutral 3rd party attorney write up the agreement.

Forget finding homes that need just carpet and paint and making a killing.Those books are full of crap.Regular buyers will be all over these homes offering full price and the assett managers for the bank know it.


Problem homes equal MONEY.Regular buyers won't touch them and most investors are scared so banks are motivated to dump these at a big discount.


Every investor is looking for a neasy fix with a huge markeup.When the 1 out of 100 comes ont he market they ge tin a bidding war and overpay because they can't find deals.

Welcome to the world of REAL real estate investing and not the crap they sell in seminars.

It's much easier to huck there stuff then find that great deal!

yea the more I read about the flipping thing, the harder it seems to actually work well enough for a decent price, especially if you dont have straight up cash in your pocket to do the deal with no interest quiet/holding costs and that ability to get a good look when offering to buy.

You could not be further from the mark. If you plan to do flips you need to first find a reliable and experienced general contractor if you do not have the time to run the project yourself. He should be experienced in rehabs and you should take him or her with you when you view the property until you gain some experience. The contractor will then give you a dollar figure and time period to get the job done. In this business time is money so be wary of those urges to save money if that savings will cost you more time.


If you structure the deal correctly you will have your holding costs figured in when the offer is made. When I make an offer I already know based on comps and experience what the home will be worth when I get it done. I build in all holding costs for a specific period and have already figured the minimum profit I will take for the flip. Learn how to structure the deal because that is where the money is made.

I guess what i meant was that its alot more involved than one might think. I mean I know its not like the tv shows, but even as an agent its more to be mindful of besides the obvious.

I guess what i meant was that its alot more involved than on might think. I mean I know its not like the tv shows, but even as an agent its more to be mindful of besides the obvious. But is there any competing with a cash buyer? I guess you just have to get to em first and tight it up with an offer?