Hi Mic,

Thanks for the update on the Buffalo market. Do you mind sharing details on some of the deals you have purchased for yourself in Buffalo? I am interested to see just how profitable these properties are. I’m not saying they aren’t, just curious. From my research, I couldn’t quite see the HUGE cashflows everyone was talking about. I guess to be able to reasonably assess the performance of your purchases, you would need to have owned the properties for some time (maybe 6-12 months). If you, or anyone else who has purchased in Buffalo, would be happy to share a break down of ownership costs, net cashflows, pitfalls, unexpected costs, maintenance, etc… I would love to hear about it. I don’t want to see projected returns either as these aren’t always accurate and sometimes over estimated.

Regards,
Ozi

Hi Westan,

I had the print out of the article at home, but have managed to find it online. Sorry for the mix up in states/cities The ordering which I quoted was from memory and rough (I read this article several months ago).

The link below has the “correct” listings:

“2005 AMERICA’S 50 HOTTEST CITIES: Nashville Climbs to the Top of America’s Hottest Cities”

http://www.expansionmanagement.com/smo/articleviewer/default.asp?cmd=articledetail&articleid=16327&st=2

and

http://tinyurl.com/9gqpd

My memory isn’t so bad, is it? [biggrin]

Regards,
Ozi

Thats an outstanding achievement Amanda! Congratulations!

What was the appraised/market value of the property when you purchased it? Just wondering whether most of the profits were made in the purchase or in the reno.

Regards,
Ozi

Thanks for the comments Rick, Bardon and Piggy. Also, don’t forget about heating costs too! If your home is vacant over winter, you will need to winterise the pipes, or keep the heat running, or risk your pipes cracking (more costs!). Heating bills can run very high over the winters there.

Regards,
Ozi

I’m buying.

Hi Westan,

20% may look good at a first glance, but once you factor in taxes (which are very high!), property management, insurance, etc there is not much left over. Sure it may appear to be positive cashflow on paper, but we haven’t even factored in maintenance and other little suprises that tend to popup occasional, such as tenant defaults and tenant damage. With a $40,000 property, you can imagine the property is most likely anywhere from 80-100 years old and your yearly maintenance costs can really chew into your cashflow. You may net around $3,000 a year on a $40,000 property, but your on-going costs can quite easily exceed this. I think that a lot of the investors diving in fail to realise this as they are sucked in by the high yields.

With these cheaper properties you will also find that financing is extremely difficult, possibly even impossible and not worth the hassle! For the ridiculously high mortgage setup costs and high interest rates, its questionable as is why you would bother.

I am not saying “don’t buy in Buffalo”, just be cautious and very selective as to which properties you choose. Make sure you buy in a good area and only buy properties that are good solid investments that won’t be needing ongoing maintenance. You can’t eliminate the risk, but purchasing right will help reduce it.

Regards,
Ozi

Hi all,

I am a software developer [thumbsdownanim
It seemed like a good field to get into a few years back while at uni, and I was told the money was good too. But I now realise just how much I hate it! The thought of waking up each morning and coming into work, knowing that i’ll be scratching my head for most of the day wondering what the hell is all this crap [weird]

Anyway, I’ve decided its time to move on… i’m not sure where to head from here, so if anyone has any career moves, hints, tips, or thoughts, please let me know. One thing is certain, I don’t want to be programming in my next role [specool]

Oh, a valuable bit of advice for those of you still at school, or for parents to offer their kids: choose a career which you will enjoy, and don’t just blindly get into something because people keep telling you the money is good [grad]

Regards,
Ozi

Hi Michael,

Thank you for the advice. I agree that selling may not be all that profitable in today’s market.

In regards to refinancing, would you say that valuers generally appraise properties much lower than what they are really worth in a flat market, compared to a booming market?

For example: $200,000 property (purchase price). Assume we spend $10,000 on renovations. After renovations, would this property appraise for more in a booming market compared to a flat market? (for simplicity, assume there has been no appreciation in value since purchase and the time we reno – this is probably not realistic).

I am just trying to understand how valuers work here. My guess is that in a flat market, even after renovations the appraisal won’t reflect the true value of the property, it may be a little lower. Whereas in a booming market, the appraisel may be a lot closer to it’s true value.

Any comments?

Regards,
Ozi