Lazy Man and Money

Is Now the Time to Take Advantage of the Housing Crisis?

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The following is a guest post from Rich Credit Debt Loan. The site focuses on mostly on topics of wealth building, a pretty rare trait amongst personal finance blogs. I encourage you to sign up for his RSS feed.

monopoly Right now, the news is filled with images of foreclosed properties, falling home values and pretty much bad news all around for the housing industry. Does that mean that now is the best time to take advantage of the housing crisis? Yes and no! Is investing in real estate a good idea? Yes and no! While there is no perfect solution for making money, there are many opportunities out there right now that could make a difference in your financial future. However, you’re going to have to tread carefully before you jump in with both feet.

For the first time in many years, it is a buyer’s market in real estate. Homeowners are desperate to unload their properties before they foreclose and auction sales are continually moving property for pennies on the dollar. Technically, this is a great time to pick up some really cheap property to turn into an income stream.

The main problem right now is that banks are often too shaky to offer you a loan that you can leverage to make that extra income. Unless you have perfect credit, you may find that it is almost impossible to get a loan right now. For those of us that prefer to leverage debt instead of sinking our own money into an investment property, it is a very stressful period. There are all of these properties out there, and it’s difficult to take advantage of them.

This doesn’t mean that you have to give up however. There are still plenty of ways that you can start leveraging debt to make more money. The good news is with so many foreclosures the renters market is incredibly strong. If you can find a property in good shape, that has not been trashed by the previous owners that foreclosed, you can start making money right now.

The key is finding those properties that are in decent shape. Not everyone that goes through a foreclosure trashes their home, but it is pretty common. Before you even think about buying a property at auction or from the bank, you’re going to need to make sure that it is completely inspected. It is a great idea to go to the property yourself just to make sure.

If it is in good condition, it may be the right time to snap up that bargain and rent it out. Otherwise, you may find that you’ll have to hold onto that property for a few years before you can sell it at a profit.

Now, let’s talk about some alternative financing for the down payment (an example of good debt) since getting a loan from a bank is a little tough right now. Peer to peer lending is a great alternative to a traditional bank loan and you have the added benefit of getting a little more control over the interest rates you’ll be paying. Many people are leveraging debt by using p2p loans at low interest rates with great terms. It’s a lot easier to make extra money on a rental property when you’re not paying high interest rates to the bank.

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Angie’s List: Any Good?

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Longtime readers know that while I live near San Francisco, my wife and I own rental properties in Boston. We didn’t set out to buy them as an income stream. She owned her place before she met me. I bought my place soon after we started dating. While neither one of us intended to move to San Francisco, my wife’s career stood to significantly benefit from relocation.

As you may have heard, it’s not a good time to sell homes. Having bought out homes in 4 and 7 years ago at near market highs, there wasn’t a lot of money to be made by selling. In fact, my condo would sell for about $20,000 less than what I paid for it. As such, we decided to keep the properties and instead rent them out. My theory is that in 30 years, we’ll have no mortgage and a nice income stream – even if things look “break even” today.

Unfortunately being a landlord 3000 miles away isn’t easy. While we’ve been blessed with good tenants, the place is going to need maintenance from time to time. Bath tubs don’t caulk themselves. It’s not very economical for me to fly back, so I’m in the search of a good handyman in the Boston Metro West area.

This is when I saw an ad for Angie’s List. I’m already a huge fan of Craig’s List, so why not give Angie a shot? When I got to Angie’s website, though, there was a surprise. It wasn’t a free service like say 1-800-Dentist as I suspected. You have to pay monthly fees to be a member and find a handyman. The first month they even hit you with set-up/activation fee. I’ve joined a lot of websites in my time, and I can’t imagine what set-up/activation they have to do. It seems clear to me that this is a way to get someone to spend around $25 up front when they just want the name of a handyman (as in my case).

I’m not against paying for something, but give me a demo or something so I can see what the service does and how it works. Let me know how many handymen are in the area that I want. My wife’s place is close to Worcester, MA which is a good hour from Boston. Angie’s List’s Boston community may or may not be helpful in that case. They should at least tell me that up front.

To Angie’s List credit, they offer a 110% price protection… if you are not satisfied you get your money back… and then 10% on top of that. However, I’m always skeptical of those deals. It seems like there would be a lot of hoops to go through and if they decide not give you your money back, are you going to hire a lawyer to recoup your $25? Of course not. It’s much easier to keep the $25 in your wallet until you know what you are buying.

I’m starting to think that Angie’s List isn’t very helpful and that I should look other places for my handyman. Before I give up, I thought I’d put the question out here. Do you use Angie’s List? Where do you find a good handyman if word of mouth fails (as it has for me)? Perhaps Craig’s List is the answer for this too?