Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

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TopHatFox
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Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

https://www.zillow.com/homes/for_sale/W ... ect/12_zm/

There are a ton of studio apartments for ~50K listed in that link. I could see buying one coming out to around the same as renting. I could look into Airbnbing space while I'm not around (i.e. most of the damn time). I could also rent out the common room to someone I like - put the partners to wonderful use! :D I'd also have the ability to do whatever I want or bring whoever I want into the space within reason.

Possible dangers include needing to relocate to a new city, the place burning down, buying the wrong place, or unexpected costs. Possible opportunities include a higher quality of life, lower costs, diversification of income, and an income increase.

Thoughts?
Last edited by TopHatFox on Tue Aug 22, 2017 9:50 pm, edited 1 time in total.

Dragline
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Dragline »

If there are a ton of them, why are they so cheap? You need to think of the prospect of selling or renting such thing down the road.

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

Okay, I exaggerated. There are a few (:

Point taken on risk off re-sale. Maybe I'll do some research on real estate troughs during the year.

Laura Ingalls
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Laura Ingalls »

Zillow was not real informative on HOA/coop fees. I suspect that people are trying to unload places with expensive special HOA or tax assessments before they are due.

Lots of places are becoming less Airbnb friendly and limiting or outlawing them.

That being said look long enough and deals will materialize.

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

Laura Ingalls wrote:
Wed Aug 23, 2017 7:46 am

Lots of places are becoming less Airbnb friendly and limiting or outlawing them.
Wow, why?

saving-10-years
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by saving-10-years »

@Olaz, look at this another way. You cannot escape that easily from a studio apartment you own. You have to stick with it. Even if (say) the neighbours are disruptive and make your life miserable. Or they (say) rent their apartment to a series of Airbnb party animals who keep you awake. The owners are not around to complain to, the Airbnb renters are not receptive of your 'keep noise down' complaints. In fact as the occupancy turnover is so high complaints to one set only brings a short term respite as they move on. I imagine that many buildings would not welcome someone who was thinking of letting out via Airbnb while absent themselves.

OTCW
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by OTCW »

Hotel lobby doesn't care for Airbnb for obvious reasons. Cities also collect a pretty good hotel tax usually. Until they can figure out how to transfer that to Airbnb, they also have their reasons for not caring for them. $$$$$

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Ego
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Ego »

It could be an enlightening experiment to pick one of the listings and run the numbers (all of them) to see how it stacks up against your current living situation.

Dream of Freedom
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Dream of Freedom »

Ya why don't you visit one or two? See what they are like, find out about HOA, ect.

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

I think I'll make it a hands-on research project ~

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

I found a 500 sq foot studio for 28K close to work and .5 mi from the train station. Safe neighborhood.

https://www.zillow.com/homes/for_sale/2 ... ect/13_zm/

Planning on visiting it. Looks like the numbers may make sense. Around $160 of monthly fees besides the mortgage. Need to find out about utilities, insurance, and hidden repairs. Also, what the "Co-Op" rules are. Good news is, co-ops filter party-animals out of the living space.

Selling it could be another story, but then, I'd spend around $28K on rent in 3-4 years. I have a 100% chance of not getting rent $ back. Work contract is also for a few years, so I'm stuck here regardless. Worst case I could rent the place or go through the process of selling.

I don't believe renting out the common room would work in this set-up, however. It looks like there's no common room lol. I was looking forward to land-lording :P

---------------------

One question, the monthly mortgage is minimum ~$100 + interest payments. With the monthly fees of 160, that's about $300-400/mo.

Is there any benefit to paying off the mortgage then? Couldn't I just pay the minimums forever and invest the difference? The piece of mind of a paid off living space is nice though.

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

Looks like the 28K apt's building is cash only and doesn't allow renting. They're also under "financial problems"

Next!

TopHatFox
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by TopHatFox »

I'm confused with this one: https://www.zillow.com/homes/for_sale/W ... 12_zm/3_p/

It foreclosed and is selling for 22K, but is actually worth 263K? How does that even make sense?

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Ego
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Ego »

The bank got stuck with an unfinanceable, unrentable lemon so they priced it to sell cash only. Maybe foundation problems. Or a former meth house. Or full of toxic mold. Or maybe the HOA is in some form of financial trouble or potential liability. Or... a million things.

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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by jacob »

Or a typo that missed a zero by the clerk filling in the data.

The so-called "value" is just a model output based on "similar" listed or sold units in the area. If the input data is particularly scarce (in space or time), it's not unusual for mark-to-model to be wildly out of whack.

This is not really any different than any other financial data.

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Ego
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Re: Purchasing tiny apartment + insurance as investment? (Instead of renting for 3 + yrs)

Post by Ego »

It's been listed for 157 days. Plenty of time to correct a typo. Also, see the Price/Tax history. Price has gradually stepped down from $90k in 2010.

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