WatchHey All,
I'm thinking about jumping into the rental property market and wanted to get some general tips/advice from some of the people in the know on this site. I know the numbers are the most important thing, but was wondering what was has been the most and least successful opportunities for you all and some things to lookout for/if you could do it all over again type stuff. I'm in the St. Louis area and my father in law is in the apartment biz and has a bunch of experience that I will pull from him. But its been a while since he was just starting out and its a completely different time then when he started. My inital thinking was to start with a Duplex and see what I can make of that over a few years before deciding if I should continue this or just stick with my 9/5.
Fire away...
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47 male
Lafayette, CA
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My #1 advice is to buy a time machine and buy property in 2009 and 2010.
If that option is not available to you, I think a duplex or 4-plex would be a good start assuming you could live in one of the units and manage the rest yourself. Try to find something without an HOA and HOA fees.
Make sure you have about $10,000 in the bank for unexpected disasters like a roof or a sewer collapse. Otherwise yeah it's pretty much about the numbers.
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iwog says
this.
I kick myself everyday for not buying as many as I could.
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San Jose, CA
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Numbers are only one part of the equation. Location is just as important. It depends on your objective.
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Vero Beach, FL
HOA fees aren't always bad. I own a rental in a neighborhood with a community pool and playground. The HOA also does lawn and sprinkler maintenance. The fee is $125 per month.
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Scottsdale, AZ
robertoaribas's website
iwog says
except that some neighborhoods are so much trouble, even with good numbers it isn't worth it to me...
if nobody without a meth habit or felony convictions will live there, good luck getting that rent!
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47 male
Lafayette, CA
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robertoaribas says
I agree with this which is why I avoided Antioch and Pittsburg even when returns of over 10% on 100% cash properties were available. A decent part of town with good tenants is preferable to higher returns in my book.
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Wait for a few years.
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If your father is in a rental business and is local, ask him. As someone just entering the field you might make basic mistakes that cost you money.
Cost of ownership (mortgage / insurance / taxes). Cost of maintenance... is the house really old? Just repainting and changing the carpet is not expensive, but if you have to get into electrical, plumbing, roof, etc... it gets pretty expensive even if you get to write some of that off.
Can you financially handle not having a renter for an extended period? Important thing to consider if tough times arrive.
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I have a friend who invests in a duplex in a not so good area of St Louis (near Wash. Univ.) I would put it, eventful. I believe one of the tenants got arrested in the duplex. Also, in that area, it's kind of an old town. So, you may have to spend more on maintenence if you get a old house. St Louis is not expensive but not cheap either. All in all, I believe it is not easy to get a higher than 10% return rate for cash investment. For starter, I suggest to find a relatively safe area and do strick background/credit checks so that you don't run into a bad tenant who will leave a bad taste in your mouth.
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ctg11 says
Then why aren't you asking HIM the BS questions then?
It seems kind of pointless to waste the time and energy to ask for advice here, doesn't it?
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Like E-man said, you need to define you objective before anything else. Roberto and Iwog are looking for cash flow right now, I'm looking for faster pay down ( I only take 15 year mortgages) to defer some of the tax obligation and cash flow until I'm retired.
What you can afford will dictate your tenants. Problem is what you can afford might be affordable because there is a glut of similar units. Take a lot of time to look at what rents and what sits. There can be sharp stratification in an area, with a shortage of some types of rentals, but a glut of other stuff.
upisdown says
Never hurts to ask.