Ahhh This Might Be the One

Readers of this blog will know we have been on a quest for "The Monkey Business Mansion". What is that? Well, we are going to purchase a property somewhere with the intention of renting it out and then spill all the details on these pages. The ups and downs. The fraudulent (hopefully not) renters. The price movements. The taxes and fees associated with it. To teach the public what it entails to be a real estate mini-mogul. Of course to have some real fun, we invite you the viewers to invest in the property along with us. We'll probably set up a simple LLC and buy away.

 

Now we've really been doing some homework and have found a couple of gems. One is a single family home in Florida that I will call "Plan B". The other is in a full service high rise building in the Buckhead section of Atlanta, Georgia, which we will call "Plan A".

 

Plan A is a 1 bedroom, 1 bathroom, 837 square foot place in a building that was originally built in the 60s and was completely renovated in 2005 when yours truly took the plunge for an exact unit (albeit on a higher floor) for the sprightly price of $152,000. The developer threw in 2 free years of HOA fees (home owners association fees that cover all kinds of amenities in the building like a pool, a gym, a doorman, a free parking space, water, sewage, basic cable tv, etc). Now those HOA fees that I pay are $354 a month. It would be the same for this Plan A property. So I will be checking the unit out for any wear and tear but its got all tricked out kitchen appliances, a stacked washer/dryer in the unit, and you can walk to a lot of places from here (i.e. nightlife). 

 

Wanna know what they are asking for the place? 99k. Yep that aint a typo. So I guess my marked to market posiiton on my original purchase is down 50%! Nice purchase Richie. But you know what? I got a renter in there that pays me $1175 a month and that covers almost all of my expenses, mortgage, taxes, HOA fees, insurance. So guess what? As long as I can keep a renter in that ballpark figure, I dont really care what happens. Well, that is until I want to sell. But I can wait it out. A loooooooooong time. Wanna know what the numbers are for this property?

 

Lets say we buy it at 99. (I think we are going to bid them 80k for the place and see what happens but lets say its 99). We put 20k down. We have a 79k mortgage. Wanna know what the monthly payment is on a 79k mortgage is for 30 years at 5%? $425 a month. So add that to the $354 a month and lets say another conservative $200 for everything else (taxes, any kind of repairs or cleaning, etc) and we are talking about $975 out of pocket a month. Right now we have someone who will move in for $1000 a month. Voila. Remember if we do get it for 80k drop our out of pocket expense to $900 a month. I dont even want to talk about what happens if things turn around and we can sell it for a still very reasonable $125k. This isnt even a short sale or a foreclosure. The person is moving and just wants out. Goodie for us.

 

Now the building is in good financial shape and they didnt even raise the HOA fees for this year. We will be acting fast on this. My people may already be inspecting the unit as we speak! If you are interested, e-mail us at bensalzproductions@yahoo.com with your questions or indications of interest. Good luck players.

Comments

[Big E in NYC]

RB, I'm from Ga., let me know how this comes out and if it trades away from you, at what level?

There's always a mkt in Buckhead, it's where everyone hangs........no downtown in the capital city to speak of.

Quite frankly..........Atlanta sucks.

[richie]

Divvy,
I got all the math worked out bro. Florida is the next conquest. This is a situation that if I buy it right, I will have nothing come out of my pocket and in 5-7 years minimum the price for this particular unit will double. For a nice 10-14% annual IRR. Remember I know this building. The seller is someone who needs to get out. I'm bidding 80k shortly just to see what they say. Lot of young professionals in Atlanta who can afford at least 1k a month to live in a nice full service building like this in a nice 'hood. Not saying I'm gonna get it but I will get real close. Keep in mind too when appraisal values come down, taxes will too. (At least for a little while)

[divvytrader]

dude ..... you miss the headlines yesterday ? Apartment vacancies at highest on record ( they started tracking in 1980 ) ..... as a result , rents are plunging ..... oh , and as rents plunge , new buyers use higher cap rates to account for that new risk and their bids go lower . Its fools math to look at the plunge in price to buy but use a rent that looks backwards ..... i'd be building in like $850/mo in rent myself ..... think deals in Miami and Florida are better ( where at least you have the tourist / retiree bid for a place to live you don't get in Atlanta )

[richie]

So I take it you are not interested Fred?

[Fred]

hope you can keep renting it for 1000/mo in a declining rental market where rents are going down FAST! My guess is you will be under water when the current tenant moves out.

[snowli]

hope our meatball parm of a president is ready to fix this all thanks to his fine pedigree of experience and his sincere promises of hope and change. because i know that a man with zero experience but who can say nice catchphrases in his lovely speaking voice will fix all of this and make us all safer at the same time. because he said he would in that nice confident vooice of his and he is not that horrible bush and that spielberg and streisand assure us.

[big frank]

ugh. vomit. oh no. thi as much as 1mm other things says that this whole mkt has yet to figure out how mis priced it is and how bad it is gonna get when the whole real estate mkt (comm'l + resid'l) price it right. and then the loans blow up like nagasaki.