Is it time to buy an investment property?

Here in Louisville, Kentucky real estate sales have slowed significantly. With all the loan program changes for the first time homebuyer, it is getting harder for them to get loan approval. FHA has decreased the downpayment amount to 1.5%, but many first time homebuyers have trouble even saving up that amount. This means that many of the first time homebuyer homes aren’t selling.

Anytime a significant part of the market isn’t selling, prices have to come down. When prices come down the investors step in. My partner and I recently bought a 3 bedroom 1 1/2 bath 2 story home for $29,000, it needed about $8,000 in cosmetics and waterlines (no heat =broken pipes, vacant=copper pipes gone) and is worth about $70,000 in a normal market. This is not a normal market, so we have it for sale for $55,000. It will rent for about $700/month. If it doesn’t sell in 60 days, we’ll put a tenant in and wait a couple of years for the market to normalize and let the tenant pay off our mortgage.

This sounds easy, doesn’t it? It can be, but we already have a relationship with a local bank that will lend us 100% of the sales price for up to 3 years. We just have to come up with the repair money and get the work done. It’s also important to know your areas, it’s only a good deal if you can sell it, or put a tenant in. There are areas that are so rough that it’s almost impossible to get a tenant to live there. It’s not a deal if you can’t make any money! Be sure you do your homework, then jump in! It’s time to buy!