I'm interested in the idea of owning a rental property and getting some steady income from it. As I start to learn more about the topic(I'm just starting out) the biggest factor to consider seems to the rent/purchase cost ratio. I've seen various ways people have of computing this, sometimes adding in an renovation/improvement costs, accounting for some vacancy, paying a PM company, etc. However, the end game of how to make money seems to be to find a property to buy cheap enough that the rent/buy ratio makes sense.
These ratios seem to be different for different types of properties(SFH/Apts/Condos/etc) as well as where they are located(rural/city/burbs/NSEW/etc). In order to try and get a lay of the land I'm thinking of doing some data collection and analysis to get some more information. What I would try to collect at a basic level is what a place is renting for and what it was purchased for. Right now my plan would be to grab a bunch(1000s) of these examples from all across the country and see if I can find some patterns of certain areas or types of properties where the ratios are good.
Before I start fiddling around on my own I thought I'd reach out to this community to see if anyone knows of any resources out there that already accomplish this. It would be great to take a look at what data has already been gathered. Also, what do folks think about this idea in general, would it even help? Let me know what you think or what related resources you know of that may help.
Thanks
Huge undertaking. I'm not sure the results would be reliable or worth it.
1. What are you trying to accomplish? a. "steady income" or b. "make money"
2. "rent/purchase cost ratio." From when? 2013, 2000, 1970? An average of the last 10 years or the median of the last 10 years? How would you compute it? How would you know if it was moving up or down? How would you differentiate between the different expense ratios for different properties in different locations?
3. How many target areas? How big would they be, neighborhood, city, metropolitan area?
Even with a source for this information I think you'd have to have area knowledge to make any sense of it.
I invest for appreciation and rent growth. I use neighborhoodscout.com for general information but would not make an investment decision based solely on their reports.
Good luck, I'd like to see your results.