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Old 10-04-2009, 09:00 PM   #1 (permalink)
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Default Real Estate Investors Come Out

Looking at a rehab that they are asking $5000 for in Reading. Probably needs $5K of work that needs to be done by professionals and the rest of it is just painting etc.

Section 8 rents are $800 in Reading, so this could pay for itself in a year.

I'll post pictures and video when I have them. Wish me luck and any advice you old hands can give me would be greatly appreciated.

Thanks,

KD
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Old 10-04-2009, 09:27 PM   #2 (permalink)
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I lived in Reading for 7 years where is it at, I worked on alot of lower end houses there and I can give a little advice
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Old 10-04-2009, 10:10 PM   #3 (permalink)
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Zip code 19606, its definitely in the section 8 area.
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Old 10-04-2009, 11:57 PM   #4 (permalink)
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What do you mean by rehab? $5000? What the heck is it, a 10x10? Some of my friends own rental property in the projects here in the Twin Cities. They have a heck of a time keeping them up and collecting rent. Remember to at least double what you think it will cost to fix something up.
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Old 10-05-2009, 12:09 AM   #5 (permalink)
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Originally Posted by stumpfreeman View Post
What do you mean by rehab? $5000? What the heck is it, a 10x10? Some of my friends own rental property in the projects here in the Twin Cities. They have a heck of a time keeping them up and collecting rent. Remember to at least double what you think it will cost to fix something up.
Meaning that the electrical, plumbing, foundation and formation are all in good working order. The bathroom needs some help (from what I could tell in the dark) and there may be some piping problem in the kitchen (they took some copper piping when they left).

The rehab is the painting, sanding and finishing the floors and or putting carpet in, fixing a couple of windows (they might all have to be replaced). A lot of this can be done with sweat equity. I have an electric sander and can do a floor myself rather than pay a contractor for it. I can paint myself rather than pay a contractor for it. I can install battery operated smoke alarms and a bannister to get it to section 8 specs.

I am going to see this place Tuesday afternoon and if it looks promising enough, I'll get an inspector to take a look at it.

The Twin Cities are much more expensive than NEPA, I'm not shocked my numbers surprise you. To give you an idea of what housing costs around here, the places I'm looking at for my family to move into are in the $75-90K range for a 3BR 1 1/2 Bath on the outskirts of Allentown.

I've been looking at these places for 6 months now. Mostly its because I'm pig-headed and I don't want to take a loan to do a rental property. I have $22K saved up and want to do something with it, and if I can make a rental property functional for $10-12K and own it free and clear, I can rent it out for $650 per month as a Section 8 and recoup my money in 2 years.

Also, I have the added help of being a lawyer, which means I can draw up a lease that will make your head spin and be enforceable in court.


Just as an aside, the last place I looked at was missing the 2nd floor and the toilet was hanging out by the piping. I passed on that one.

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Old 10-05-2009, 12:22 AM   #6 (permalink)
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Ahh, makes more sense now. Just remember who you will be dealing with in these low rent properties. Writing a great lease is one thing, but actually collecting money from someone that has none, is another. Like I said, I have buddies who are into this stuff, tons of headaches, these places become money pits. That's why there are always a ton of them on the market, at least here there are. Your renters will break everything, and then complain that you should fix it all. I hope you get a good one and have good luck with tennants.
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Old 10-05-2009, 01:36 AM   #7 (permalink)
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You all are lucky. Everything to do with houses are expensive here in hawaii. I got a LOW PRICE for tiling my storage 600sqft for $3500 LABOR ONLY. Had some bids at $6000 LABOR and the average bid was $5000....... JUST TILE LABOR!


some low end bids in hawaii:

$300 a day labor(finishing carpenter) LOW end bids.
$200 a day Painting, LOW end bids
Houses average $150 a square foot to build a AVERAGE no frills house.

IT SUCKS IN HAWAII.
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Old 10-05-2009, 01:42 AM   #8 (permalink)
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Originally Posted by h4auto View Post
You all are lucky. Everything to do with houses are expensive here in hawaii. I got a LOW PRICE for tiling my storage 600sqft for $3500 LABOR ONLY. Had some bids at $6000 LABOR and the average bid was $5000....... JUST TILE LABOR!


some low end bids in hawaii:

$300 a day labor(finishing carpenter) LOW end bids.
$200 a day Painting, LOW end bids
Houses average $150 a square foot to build a AVERAGE no frills house.

IT SUCKS IN HAWAII.
But you get to live in a tropical paradise and I get to live in, well, Allentown.
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Old 10-05-2009, 03:26 AM   #9 (permalink)
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Quote:
Originally Posted by h4auto View Post
You all are lucky. Everything to do with houses are expensive here in hawaii. I got a LOW PRICE for tiling my storage 600sqft for $3500 LABOR ONLY. Had some bids at $6000 LABOR and the average bid was $5000....... JUST TILE LABOR!


some low end bids in hawaii:

$300 a day labor(finishing carpenter) LOW end bids.
$200 a day Painting, LOW end bids
Houses average $150 a square foot to build a AVERAGE no frills house.

IT SUCKS IN HAWAII.

Those prices aren't that bad. When you consider insurance, taxes, unemployment, workers compensation, etc........I know those are low end prices, but they're not much more than here. Houses here surpassed the $100 per square ft price here, years ago. The materials are what drive the square foot price up.
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Old 10-05-2009, 04:19 AM   #10 (permalink)
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Those prices aren't that bad. When you consider insurance, taxes, unemployment, workers compensation, etc........I know those are low end prices, but they're not much more than here. Houses here surpassed the $100 per square ft price here, years ago. The materials are what drive the square foot price up.
That is $150 to build, NO LAND. land runs around $500,000 in honolulu, Then you build at $150 sqft...errrrrr not good.
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Old 10-05-2009, 06:13 AM   #11 (permalink)
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Quote:
Originally Posted by stumpfreeman View Post
Ahh, makes more sense now. Just remember who you will be dealing with in these low rent properties. Writing a great lease is one thing, but actually collecting money from someone that has none, is another. Like I said, I have buddies who are into this stuff, tons of headaches, these places become money pits. That's why there are always a ton of them on the market, at least here there are. Your renters will break everything, and then complain that you should fix it all. I hope you get a good one and have good luck with tennants.
I was in real estate for 12 years and had quite a few section 8 tenants. They only have to pay a small portion of the rent whereas the government picks up a huge percentage of it. Yes you will get those that just don't care, but I always got higher rents from section 8 tenants and if they screw up they are booted from the program. They have quite a bit to lose by trashing your property.
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Old 10-05-2009, 07:49 AM   #12 (permalink)
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If you are going to get a Section 8 property make sure you do your research.

Here in the People's Republic of Massachusetts the owner of the property is treated just a little better than a level 3 sex offender.

I have a friend who had 2 rental properties and everything ran well for 6 years as he had market rate tenents.

The the town placed section 8 people in 2 of his apartments. #1 wasn't a bad tenent but getting their $60-$80 a month was sometimes hard.

Section 8 tenent #2 knows how to play the system.
She moved in and for the 1st 3 months efverything was cool.

The 4th month she didn't pay and he also didn't receive his gov't portion of the rent. He though it was a screw up and waited another month and the same thing happened.

She complained that the bathroom needed work so she wasn't paying until it was resolved and as a complaint was lodgeg he would not receive his gov't payment until he fixed this issue.

So you think this is no biggie, right? Well she wouldn't let him in the apartment to fix the issue. He complained to the town and they said he had to fix it to get paid.

After 3 more months of not collecting ANY rent from this unit enough time had passed so he could start the eviction process and THAT too another 6 months. She trashed the place before leaving and he had to pay to get all the stuff she trashed fixed.

He lost 1 year rent and another 3K in repairs.

So do you reaserch before getting a section 8 property.
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