NOVEMBER 30, 2016 Volume 11 • Issue 48
RE WEEKLY STORY COUNTY
RESIDENTIAL • ACREAGE • FARM • COMMERCIAL • AREA DEVELOPMENT 515-233-3299 • 317 5th Street, Ames All REALTOR® ads within are REALTORS® licensed in the State of Iowa
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• AREA DEVELOPMENT • FARM • COMMERCIAL RESIDENTIAL • ACREAGE 317 5th Street, Ames State of Iowa 515-233-3299 • ® licensed in the
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Story County Sun • Wednesday, November 30, 2016 • Page 9
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Page 10 • Story County Sun • Wednesday, November 30, 2016
DEAR MONTY
Question your motives buying investment property
R
eader Question: My husband and I have the chance to purchase a second home. We value our home at approximately $265,000. We owe about $130,000 on the mortgage. Our monthly mortgage payment for our house is $1,100. That plus all of our other monthly bills comes to approximately $2,300 to $2,800 per month. We want to buy a house that is on the internet for $215,000. The homeowner is an acquaintance. He stated that he would like to get about $190,000 out of the sale. It would be a private sale. So there would be no commission fees just closing cost? We can sell our stocks which would bring about $40,000. My husband is not retired but has two pensions set up for when he does retire. So the $40,000 is more or less freed up for such a transaction. We could add additional dollars to make a 20 percent down payment and cover closing costs if needed. We would rather keep those extra dollars in the bank as a rainy day fund. We think the rental value of this house is about $1,300 to $1,500 per month. We plan to rent out the house for a while; possibly for several years. We would buy the house with the intention that one of or even both of our sons upon graduating college will find gainful employment,
with opportunities to lose money. Proper due diligence Additionally, you are making assumptions that RICHARD MONTGOMERY may not be accurate. Many unexpected events can occur in three years. For at which time they could take over the house and its example, it appears part of your motivation to buy payments. We would like to know now is that you believe that you will save money exactly how to go about buying direct. purchasing the home Even if you decide to without using an agent? buy, it would be wise to Finally, what are the look at several comparable pros and cons of owning homes before going ahead. a second home? Any Viewing other similar other answers you could homes will help you better provide to questions I understand value. haven’t asked would be What if your sons don’t appreciated. want to live there? Or do not want to own a house? Monty’s Answer: A What if they relocate in notion that comes forth another state or another reading your letter is to part of the country with suggest to you and your husband that there may be their job? What if you get a bum tenant who a few subjects for you to review together before you stiffs you for six months rent (there are renters out decide to go ahead with there who prey on new your plan. For example, landlords). your motive for buying When investing in this home is to help your real estate, scrutinize the two sons buy their first property with a certified home when they finish public accountant (CPA) to college and land their first work out the numbers with job. For most new real pencil and paper. estate investors their goal The advisor should have is to improve the returns a practice that includes they receive on their savsmall rental investors. ings and build wealth. Consider that the reason — Richard Montgomery you state may not be a gives no nonsense real good reason to buy an estate advice to readers investment property. Not most pressing questions. everyone can or should Send him questions at own rental property. DearMonty.com. Being a landlord is a risky business fraught
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