So, I Took My Checkbook...

As mentioned yesterday, I recently completed a long road trip of a few weeks through the midwest and parts of the south. I took my checkbook because I wanted to purchase real estate in other states, Illinois, Indiana, Missouri, Ohio, Kentucky.

In my travels I had been looking at single family homes, multi-family units and commercial property that seemed like amazing deals. Being from Southern California, the properties I viewed seemed unbelievable in price and quality.

Those red brick structures are much more attractive than our frame/stucco homes! Wow! The big white columns in front too! I liked the five acre single family home with a fully stocked pond for $139,000; the apartments overlooking the Ohio River; the 14,000 square foot bowling alley for $350,000; and the red brick, hardwood floor duplex for $60,000. I was SO EXCITED.

Guess what…in further research:

The property taxes are much higher than in California;
The vacancy factor is amazing…I was told to assume 25%;
The populations of these areas are declining, or stagnant at best;
The duplex referenced above rents for $300 per side!!!
There is no demand for the bowling alley, thus the reason the previous owner vacated;
It appears 25 to 50% of the commercial property is vacant and/or boarded up;
There aren’t a lot of zoning controls, junk cars all around;

And lastly…the Single Family Home referenced above sold for $80,000 in 1979 ($59,000 appreciation over 27 years), the duplex referenced above had an asking price of $120,000 in 1994 ($60,000 depreciation over 12 years).

I’m staying in California.