This week, we’re letting one investor share her story:
In November of 2009, I entered the challenging yet rewarding world of property investment. Moving from Massachusetts and having only lived in Tampa for 4 years, I wasn’t sure if Tampa was my forever home. I quickly recognized that I could own for less than the price of renting if I found the right opportunity. I decided that I would purchase a piece of property with long term rental income opportunity.
Living on my own, a house was too big to maintain, and many were not affordable at that point in my life. I found a 2 Bedroom/2Bath condo that I decided to purchase, move into and rent for income in the future as an “exit strategy” when it came time to move away. With 3 colleges in an 8 mile radius, I thought – “NO PROBLEM” when it comes time to find a tenant or two.
In 2009, my monthly condo expenses were as follows:
- Mortgage $710.00
- Condo Fees $199.00
- Utilities (Cable, Internet, Electricity) $300.00
- Property Taxes (Total amount over the course of a year) $100.00
- Total without Utilities/My Financial Responsibilities if I were to Rent: $1009.00
What I failed to do was analyze my long-term risk. For the first few years, I had a roommate to pay $800/month for the spare bedroom/bath. With a renter already on property, the property was basically paying for itself. By installing a new AC unit, utilities dropped to about $200/month instead of $300. The future looked bright – If I wanted to leave, I could rent for the going neighborhood rate of $1100-$1200/month without utilities included, and be making $100-$200 each month.
Condos are member owned. So when condos foreclose, the remaining members are stuck making up for the lost condo fees. Right now, we are only 70% occupied which has resulted in tremendous change to my monthly expenses.
- Mortgage $710.00
- Condo Fees $399.00
- Utilities (Cable, Internet, Electricity) $200.00
- Property Taxes (Total amount over the course of a year- Taxes have dropped due to a significant decrease in assessed property value) $40.00
- Total without Utilities/My Financial Responsibilities if I were to Rent: $1149.00
Today, I am stuck. If I want to leave, I cannot sell due to the amount of short sales and foreclosures in our complex. The going rate for my 2 Bedroom/2 Bath condo would result in a significant loss. If I want to rent for the going rate of $1100-$1200/month without utilities, I will be losing money or just breaking even each month, allowing little to no flexibility for repairs/unforeseen expenses.
What I should have done:
- Explored foreclosure opportunities.
- Relied on a trusted company to locate and negotiate the best deals in Tampa Bay.
- Spoke to numerous lenders and explored numerous lending opportunities to ensure the best rates/lower my overall monthly payments.
- Evaluated my risk and the possibility of monthly payments to change over time.
The above mentioned areas are all services they could have helped with, had I known of them at the time. If I make any other property investment decisions in Tampa Bay, I am contacting them first.
– Michelle, Tampa Bay
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