Author Topic: Landor n Stella Bought a House for $7,000. Follow our adventures here!  (Read 26269 times)

c

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #50 on: October 04, 2012, 09:10:13 PM »
Looks great. I added my email to follow your blog and will catch up on your posts over the weekend. I'm also blogging my renovations, but they're not as extreme and mostly a way for my family to follow along.

It's a big commitment - both the DIY and the blogging. I battle with remembering to take enough photos of the process as I get caught up in the projects.

Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #51 on: January 17, 2013, 10:49:02 PM »
Some major and exciting news about new jobs, cross-country moves, and the blitz about to begin on Heartland House! Check it out here: http://heartlandhouse.wordpress.com/2013/01/18/big-news-for-heartland-house/

marty998

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #52 on: January 17, 2013, 11:54:33 PM »
I've only just discovered this thread (thankyou very much for reviving it). I find it utterly amazing that a house can sell for $7,000.

$7,000 gets you about 3/4 of a square metre of a run down piece of crap in Sydney. Yes you read that right. About 6 square feet.

Surely this violates some sort of fundamental law of economics. It's almost like stumbling on a money printing press. Imagine buying a stock for $7,000 and getting paid a $1,000 dividend every month. This is the property equivalent. So why haven't investors bid up the value of property so it generates a non super-normal rate of return? Is the US property market and the economy in general so f'ed that investors require annual yields of ~150% on property?

I have a plan to buy 1 investment property this year for around $350k. Over in the US I could buy 50? And make my money back in 7 months of rent?

jpo

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #53 on: January 18, 2013, 05:04:20 AM »
I have a plan to buy 1 investment property this year for around $350k. Over in the US I could buy 50? And make my money back in 7 months of rent?
It looks like they've put a ton of sweat equity into the house since they bought it as well, I'm sure nobody would have ever rented that place when the septic was dumping straight into the basement.

Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #54 on: January 18, 2013, 06:38:52 AM »
Property in the rust belt (most of Indiana, Ohio, non-Chicago Illinois, Michigan) is quite affordable. Before we bought Heartland House, we owned a 2 bedroom 2 bath 1,200sf ranch house on half an acre with a 2 car attached garage and it cost us $81,000. We did a little bit of work and painted all the rooms in the house and sold it about 2 years later for $95,000.

There are a few companies that I know of that work with out-of-country investors to buy property in the US. The investors provide the capital, the company pools all the resources of many investors, and then buys batches of property at auction or at sheriff sales. Then the company fixes up all the houses and sells them, and the profit is distributed to the investors based on what they paid in (and of course the company keeps a share too).

NumberJohnny5

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #55 on: January 18, 2013, 07:15:36 PM »
I've only just discovered this thread (thankyou very much for reviving it). I find it utterly amazing that a house can sell for $7,000.

$7,000 gets you about 3/4 of a square metre of a run down piece of crap in Sydney. Yes you read that right. About 6 square feet.

Surely this violates some sort of fundamental law of economics. It's almost like stumbling on a money printing press. Imagine buying a stock for $7,000 and getting paid a $1,000 dividend every month. This is the property equivalent. So why haven't investors bid up the value of property so it generates a non super-normal rate of return? Is the US property market and the economy in general so f'ed that investors require annual yields of ~150% on property?

I have a plan to buy 1 investment property this year for around $350k. Over in the US I could buy 50? And make my money back in 7 months of rent?

Sure, you could possibly buy 50 $7k homes for $350k.  But then you're going to spend another $15k-$20k on each to make them habitable, and that's if you do all the labor yourself.  Plus rent in those areas isn't going to be sky-high, I'd count on closer to $500/mo than $1,000/mo (and even then, it might be a bit lower).

But yeah, housing seems to be much cheaper in the US.  Our 3bedroom 2bathroom house, on about 3/4 acre of land, about 30-60 minutes from a largish city, cost about $18k.  It was virtually move-in ready (one day of cleaning, and we moved in).  It did need quite a bit of work (replace nasty carpets with hardwood flooring, replace some missing windows that had been boarded up, etc.), I figure all-up we have about $25k in it.

Now, if you wanted something a bit more marketable (larger, closer to a major city), $30k-$50k would get you something about a 30 minute drive from Nashville.  Well, at least it would a few years ago when I last checked.  If memory serves me, there was a much nicer 4 bedroom house that was just under $40k, there was one room they were trying to divide in two (so some unfinished work that was cosmetic only) and some animal had gotten under the house and messed up one of the ducts for the heat pump.  Otherwise it was in great shape.  We passed because it was just a bit over our budget, a bit further away from family (but great if we wanted to work in the area), and at the time there was no high-speed internet available.  If one's patient and casts a large enough net, these deals aren't that uncommon where I come from.

marty998

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #56 on: January 19, 2013, 04:54:36 AM »
Investing at those numbers is still a no brainer. $7k purchase + ~$20k renos = say $30k invested

$500/month rent x 12 = $6000 for an annual gross yield of 20%.

Mind boggling for someone who has adapted to a vastly different property market.

Well done on your investment Landor & Stellar


arebelspy

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #57 on: January 19, 2013, 08:02:00 AM »
I probably wouldn't buy at those numbers (depending on the location of the property), but everyone has their own investment philosophy and goals.  (Keep in mind about half the rents will go to expenses, so that's a 10% cash on cash return - not bad at all, but not amazing. And at those rent prices one tends to get less desirable tenants leading to higher expenses, but again, that depends on the location.)

It certainly was a great deal though, especially since they didn't have to pay a bunch to rehab it, but could gain sweat equity, and I've enjoyed reading about their progress on the house.

Just don't want the picture painted too rosy for someone coming along and not knowing what their doing and getting sucked in by unrealistic (wrong) numbers.  :)
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Self-employed-swami

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #58 on: January 20, 2013, 09:24:12 AM »
So I just spent ~2 hours reading through your whole blog!

What an amazing project!  It's too bad you won't get a chance to live in it, after all your hard work.

My aunt bought a cheap house (in her city, that was ~$80,000), that was a 530 sq ft 2 bed 1 bath.  It had original lath and plaster walls, and a very creepy basement (there was a shower head plumbed in the middle of the floor, above the drain) and the whole thing reminded me of that old house in The Blair Witch Project, with the hanging lightbulbs.

Anyway, after about 6 months worth of work, she got it all rehabbed, and is now renting it out.  I went out there one weekend (with my Dad and sister) and we sanded the wood siding (it was painted blue, and even with a mask on, my sister looked like a smurf by the end), tore out the wall between the kitchen and the living room (so a modern sized couch would fit in there), and some other tasks.  The house had original hardwood floors,and a clawfoot tub, both which were saved. 

I'd love to do a project like this, once I'm not working anymore.  Good job!

Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #59 on: January 21, 2013, 07:49:47 AM »
We bought this house intending to live in it eventually. And nearer to big cities (we're an hour to the north side of Indianapolis, out of commuting distance) prices are not like what we found with this house. So Arebelspy brings up very good points. Also, I'm not a real estate expert.

We did a LOT of work this past weekend and it felt great to be back working on it after the craziness of November and December. Expect a bunch of updates as we start working in earnest on Wednesday!

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #60 on: January 21, 2013, 08:55:03 AM »
Awesome!  I'm looking forward to more pictures.


Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #61 on: January 29, 2013, 07:40:53 AM »
Lots of pictures just posted yesterday! One of these days I'm going to remember to take pictures of something we do start to finish as a kind of step by step photo journal... But that would require me to put down my power tools for a few minutes to take the pictures. I'm loving this project!

trammatic

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #62 on: February 05, 2013, 07:49:35 AM »
Are you guys planning to sell the place before you move to CA?  If DH has to live in IN for another year and a half, why not live there?

Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #63 on: February 05, 2013, 02:36:32 PM »
Are you guys planning to sell the place before you move to CA?  If DH has to live in IN for another year and a half, why not live there?

We are going to try to sell it. Although we have to come back in August for a year, we'll be coming back to a city that is about an hour and a half drive from where the house is, so it's not an option for commuting.

Landor n Stella

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #64 on: February 07, 2013, 10:15:57 PM »
We're ready for drywall this weekend and I've put out a call for friends and neighbors to help us. If any Mustachians are near Marion, Indiana and want some hands-on DIY experience, you're welcome at Heartland House this weekend! PM me for details if you are willing to come help in exchange for beer and a free lunch.
http://heartlandhouse.wordpress.com/2013/02/08/all-hands-on-deck/

burly

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #65 on: February 25, 2013, 07:45:15 PM »
We're ready for drywall this weekend and I've put out a call for friends and neighbors to help us. If any Mustachians are near Marion, Indiana and want some hands-on DIY experience, you're welcome at Heartland House this weekend! PM me for details if you are willing to come help in exchange for beer and a free lunch.
http://heartlandhouse.wordpress.com/2013/02/08/all-hands-on-deck/

Update Please!! Your 10 days is up!

Use it up, wear it out...

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #66 on: April 05, 2013, 09:32:55 AM »
Update Please!! Your 10 days is up!

Yes, did you sell? What happened? How are things in CA?

fidgiegirl

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Re: Landor n Stella Bought a House for $7,000. Follow our adventures here!
« Reply #67 on: August 02, 2013, 05:39:44 PM »
I was just thinking of this project today.  Would love to know what ended up happening.  So cool what you were trying to do, and where you ended up!  I need closure, though!  :D