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What $250,000 Buys You Around the Country


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#121 Peppers90 NC

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Posted 08 August 2014 - 09:57 AM

I was screaming at the top of my lungs a coupe years ago to buy anything if you had the cash.  In good locations of course.

 

If I were you, and you are looking at coming back down South, I would look into buying something down here now, and find some good renters.

Yea that is the plan, probably move back down in the next two years although we do love it up here.  But reasonable value is getting further and further away from the city, and there is no way I can justify half a million dollars for 700 sq/ft when we could get 4 times the value for $350k back home.  I guess when kids come into the equation is when we'll start making those decisions.  Had we had the cash five years ago, in my neighborhood now, I think the value has gone up at least 30-50% in that time frame.  



#122 Big A

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Posted 08 August 2014 - 01:16 PM

As prices will very across the nation, we can only use general figures. Keep in mind, selling and renting and rehabbing property is what I do for a living so I think I have a pretty good backround on this subject. I'm just not seeing much basis for the argument renting will provide all this extra savings that you can invest and get more return on that capital via investment. Now this is speaking in general, because there are markets and situations where renting would probably be the better option, but those are situation where the stay will be short, or in a market with huge prices like NY or CA, or a situation like 2007 where the housing prices are falling in an unstable market.

The example you appear to be looking at is an average house in an average residential market in today's housing climate. Just double checking current listings in my area, the rental prices are about $1 a foot for common residential houses in average neighborhood. There are condos in the city at many times that rate, but it seems we are targeting a suburban house in normal neighborhood.

To use some real numbers, the house I last lived in was 3bedroom house that I sold for right at $300k, about $90k over my purchase price minus around $60k in improvements. I financed 150k about 4% rate, and didn't make extra payments. At the end of 4 years, I cashed out about $30k appreciation, but I also paid about $23k in interest, but that cost is further reduced as that interest is deductible and reduced my tax payment. Add to the cost about $5k in taxes over the 4 years, and $8k total in insurance. So roughly after 4 years of ownership, I cashed out only about $5k, yet I also lived in the house for 4 years and that has value.

On flip side, if I would have rented a comparable house, the current lease rate of the house on next street that was built by same builder and exactly the same size is $2,300. Even if I were able to talk them down to a $2k a month 4 year lease, that $96k spent over 4 years, plus insurance, plus most house rentals don't include maintenance and grass cutting so there would be additions monthly costs of maybe another $1k to $1,500, meaning a total 4 year cost of $144k minimum, all lost money.

So in 4 years
Purchasing led to about $5k made
Renting would have resulted in $144k or more loss

It's almost seems like you're trying to work backwards and make renting look like the better financial decision based on perceived liquid financial differences, but looking at an actual property, as opposed to spending $2,300 a month plus renters insurance a month, the purchase cost me a monthly mortgage payment around $1,400 a month including insurance and taxes escrow payment. So monthly the payment is cheaper. The only difference is the $50k downpayment I made that renting doesn't require, but, on the other hand, you would need to turn that extra liquid $50k into an amazing investment to make up the $144k + you will pay out to rent.

Edited by Big A, 08 August 2014 - 01:18 PM.


#123 Happy Panther

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Posted 08 August 2014 - 04:30 PM

I'll do a better response tomorrow.


Edited by Happy Panther, 08 August 2014 - 06:39 PM.


#124 Happy Panther

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Posted 09 August 2014 - 01:59 PM


So in 4 years
Purchasing led to about $5k made
Renting would have resulted in $144k or more loss

It's almost seems like you're trying to work backwards and make renting look like the better financial decision based on perceived liquid financial differences, but looking at an actual property, as opposed to spending $2,300 a month plus renters insurance a month, the purchase cost me a monthly mortgage payment around $1,400 a month including insurance and taxes escrow payment. So monthly the payment is cheaper. The only difference is the $50k downpayment I made that renting doesn't require, but, on the other hand, you would need to turn that extra liquid $50k into an amazing investment to make up the $144k + you will pay out to rent.

I ran your numbers as best I could and have the renter beating you by around $2k at a 2% investment rate. Much more if you assume he can do better and you include all of you cash outflows such as closing costs and any other repairs you may have made, appliances you replaced or maintenance that a renter would not be responsible for.

 

You should really put the numbers in a spreadsheet . It helps. The math you are anecdotally using is pretty off especially the renter "losing" $144k.



#125 Happy Panther

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Posted 09 August 2014 - 02:13 PM

Also I have your IRR at -5% but I would need to know exactly what you received as a check at the end. If all expenses and costs were included it would be lower. In other words you probably lost money on this whole deal


Edited by Happy Panther, 09 August 2014 - 02:13 PM.


#126 PhillyB

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Posted 09 August 2014 - 03:46 PM

$250k has gotten me three foreclosures in greensboro worth almost $400k. the latter of which should be just about right to land me ~50 acres in southern guilford county to build my commune :)

 

really one of the better places in the country (and even the state) to be right now IMO



#127 Happy Panther

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Posted 09 August 2014 - 05:10 PM

$250k has gotten me three foreclosures in greensboro worth almost $400k. the latter of which should be just about right to land me ~50 acres in southern guilford county to build my commune :)

 

really one of the better places in the country (and even the state) to be right now IMO

I wish I could've taken advantage of the foreclosure market. Was overseas when the "great recession" hit but we did manage to buy our own house at the bottom. There were lots of foreclosures in our neighborhood but all gone now.



#128 PhillyB

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Posted 09 August 2014 - 05:19 PM

I wish I could've taken advantage of the foreclosure market. Was overseas when the "great recession" hit but we did manage to buy our own house at the bottom. There were lots of foreclosures in our neighborhood but all gone now.

 

yeah i grabbed the first one in 2011 as the market bottomed out, then two more this year. it's still a buyer's market, and there's still great deals out there, but the days of obscenely low prices in the foreclosure market are pretty much done. i'll try to grab maybe two more within the next couple of years and then that's it… i'll rent, pay off, and liquidate.



#129 Happy Panther

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Posted 09 August 2014 - 05:31 PM

yeah i grabbed the first one in 2011 as the market bottomed out, then two more this year. it's still a buyer's market, and there's still great deals out there, but the days of obscenely low prices in the foreclosure market are pretty much done. i'll try to grab maybe two more within the next couple of years and then that's it… i'll rent, pay off, and liquidate.

Remind me. You have your commune land picked out?



#130 PhillyB

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Posted 09 August 2014 - 05:50 PM

Remind me. You have your commune land picked out?

 

not really. i check landwatch every couple of months to see what's available in guilford and neighboring counties, just to stay abreast of prices and developments, but realistically i'm not going to be in the market for buying until 2016. i doubt too much that's for sale now will still be available then, so there's not much sense in over-planning until that time comes.



#131 Anybodyhome

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Posted 09 August 2014 - 06:12 PM

not really. i check landwatch every couple of months to see what's available in guilford and neighboring counties, just to stay abreast of prices and developments, but realistically i'm not going to be in the market for buying until 2016. i doubt too much that's for sale now will still be available then, so there's not much sense in over-planning until that time comes.

 

You should check in the incorporated areas just outside Greensboro such as Pleasant Garden, Ramseur, etc. where the local governments have taken action to prevent Greensboro from annexing them. Property values just across the Guilford County line in Randolph County are pretty good, too. The NC62 corridor between 220/73 and 421 has some nice property areas as well.

 

 



#132 BuffaloBills62

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Posted 09 August 2014 - 06:19 PM

What is $250k in somewhere like Wilton, Iowa or Appleton, Wisconsin?

 

We all have an idea what it'd get you in Matthews or Ripley... but not where the rest of America lives.  Where I live it'd get you 4,000sq ft on 3 acres.



#133 PhillyB

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Posted 09 August 2014 - 06:39 PM

You should check in the incorporated areas just outside Greensboro such as Pleasant Garden, Ramseur, etc. where the local governments have taken action to prevent Greensboro from annexing them. Property values just across the Guilford County line in Randolph County are pretty good, too. The NC62 corridor between 220/73 and 421 has some nice property areas as well.

 

yep, i've looked pretty extensively throughout randolph county as well. that's the rub though; i want something that's far out enough to be cheap and avoid urban sprawl over the rest of my life, while yet being close enough to the city that i can live/work/hang out with people there without inconvenience.



#134 Anybodyhome

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Posted 09 August 2014 - 07:07 PM

yep, i've looked pretty extensively throughout randolph county as well. that's the rub though; i want something that's far out enough to be cheap and avoid urban sprawl over the rest of my life, while yet being close enough to the city that i can live/work/hang out with people there without inconvenience.

 

Could always go north of Greensboro as well. Although there are essentially 2 Greensboros- the Battleground/airport/north side and the Holden/High Point Rd/I-40. Kind of depends on which part of Greensboro you spend the majority of your time.

 

But there's also the 220 north corridor on the other side of Summerfield, up toward Madison and Stoneville. I personally never thought that was a bad drive. I lived in Martinsville for 13 years and could get to the airport in less that 45 minutes.

 

40 acres in Madison/Mayodan area: $139k

http://www.realtor.c...25_M52571-92297
 



#135 PhillyB

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Posted 09 August 2014 - 11:58 PM

Could always go north of Greensboro as well. Although there are essentially 2 Greensboros- the Battleground/airport/north side and the Holden/High Point Rd/I-40. Kind of depends on which part of Greensboro you spend the majority of your time.

 

But there's also the 220 north corridor on the other side of Summerfield, up toward Madison and Stoneville. I personally never thought that was a bad drive. I lived in Martinsville for 13 years and could get to the airport in less that 45 minutes.

 

40 acres in Madison/Mayodan area: $139k

http://www.realtor.c...25_M52571-92297
 

 

i don't know why but i've always been more attracted to the area south of greensboro than north of it. for some reason madison and beyond just feels to out-of-the-way to me (and summerfield is horrifically expensive unless you sneak up into rockingham county and beyond.) i think i would take randolph county over rockingham, and south guilford co. over north guilford. the julian/liberty area is actually fairly attractive to me.

 

of course this is all subject to change radically over the next two years depending on various factors like price. i don't want to lock myself into one spot versus another based on dumb prejudices about certain towns or areas and potentially screw myself out of the best possible setup.




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