As you might guess, finding material for these columns every week can be a challenge. As I reviewed industry newsletters, emails from readers, and conversations with my brokers this week, I thought about how much has changed since I started in this business and that if I did it again, I would choose would have to do exactly the same business.
As a 19-year-old college student almost 50 years ago, when I was living on Social Security after my father died, I decided to buy a home as an investment. The purchase price was $ 18,000 and I was a little short of funds so I offered $ 1,800 as a down payment and the seller agreed to take back a second of $ 1,800. My monthly mortgage payment would be $ 108 if the bank loaned me the money to buy the property.
So I went to the bank to ask about the loan. The loan officer didn't ask me to prove that I could afford to pay $ 108 a month. He figured the rent I was going to collect could cover the mortgage payment. If he'd done a credit check it would have required a quick phone call to the local credit bureau, as small business computers weren't available and the internet wasn't invented yet. I'm sure the credit clerk didn't have much to say because by age 19 I hadn't lived long enough to build a credit history. And yet the bank lent me the money.
With little success I started looking for a second investment property to buy. This time I found a fixer upper. I was still a student, which meant I had more time than money, so I figured I could do the repairs myself. The purchase price was $ 15,500, so the bank only suggested me $ 12,000 to buy the property, but they valued the property at $ 19,500 after the repairs and said that after the repairs were completed, they would mean mine Would refund deposit. True to their word, they returned my initial cash investment after I fixed all issues.
45 years fast forward and banking regulations would prevent this loan from coming about. In addition, most lenders wouldn't let me borrow a dime unless they were confident I could pay the mortgage without collecting rent. Without a credit history and no discernible income, I would be quickly turned away today. Plus, the idea of a college kid doing major repairs wouldn't work these days if I didn't have a building contractor license. Not to mention, the sales contracts for each property would be dozens of pages, unlike the contracts I signed, which were not even a full page.
I learned two important lessons from those early days. First, I am not and never will be a carpenter. Second, and more importantly, real estate is a fantastic business with great investment opportunities. I remember a real estate agent working in town when I bought my first property here. He used to show potential buyers homes for sale by browsing his MLS folder (remember, no computers). He said, "Here's a nice $ 22,000 house." Then he said, "Gosh, I'm sorry, the MLS book is 2 years old. Let me get the current one. Oh, you see, the same lot actually costs $ 26,000. Seems like a good investment. In fact, all of these houses are going up in value. "That was his chic and it worked well for him.
The truth is, real estate has been one of the best investments ever in the last 50 years. You can leverage the purchases, get tax breaks from depreciation and capital gains, and collect enough to cover the cost of ownership. Whether you are interested in buying a home or renting out, I expect real estate will continue to be an excellent investment.
If you have any questions about property management or real estate, please contact me at rselzer@selzerrealty.com or by phone at (707) 462-4000. If you have an idea for a future column let me know and when I use it I'll send you a $ 25 gift certificate to Schat's Bakery. To see previous articles, visit http://www.selzerrealty.com and click "What's the Market".
Dick Selzer is a real estate agent who has been in business for more than 45 years.
source https://seapointrealtors.com/2021/07/31/hows-the-real-estate-market-then-and-now-lake-county-record-bee/
WordPress.com
No comments:
Post a Comment