I have two investment properties in a more expensive area. (North Puget Sound - 10 minutes to Boeing) These are new acquisitions for us (12/12 and 4/13) and both came in under the 1% rule, however the low property taxes combined with the low mortgage interest rates made them cash flow well enough for us to pursue. Everything listed in the north end is well over assessments and both buys we made were over list price. Multiple offers are in the first day for a good investment property, its like a feeding frenzy. We never were the top offer and the two we closed on were because the first person in line backed out. In fact the first property, in the second round we were $2500 lower than the second round's top offer but our "package" was more to the banks liking so they asked us to make up the difference (it was a foreclosure). We have learned that the offer itself is critical, how much down, inspection timing and financing qualifications. Then when a buyer backs out is really tests your constitution as you step up to the plate and decide if you want to swing! The first property was sold as is, the second was a private seller doing a 1031 who was happy to drop the price back down by the estimated repairs we wanted to be compensated for.
These are NOT 500k properties but they aren't 100k either, so more expensive than less... we put 25% down.
In both cases the final signed leases far exceeded our initial estimates AND the appraisals which pleased us. We also had overestimated the water/sewer, did not end up paying garbage, and finally I negotiated with our PM on the monthly rate. You need to do a lot of research, listen to what your gut says and if the deal starts feeling wrong, back out. We bailed on 4 deals before landing these two, and between the 2 we lost one that we still kick ourselves for losing. It is 2 units away from our first property and it had been vandalized. We came in too low and our offer wasn't enticing enough for us to play, it was also a Government owned property so they don't do as much haggling.
I am banking on the tax assessments rising slow enough to keep pace with rents which I need to stay where they are. (2 doors are a newer building on a nice flat lot and it rents for over $1/sf, the older 2 doors are just under $1/sf. but the second property is HUGE, great for folks needing storage)
Our residence is in a rural part of the city with higher property taxes. We wanted the lower taxed part of town (its split into two "boundaries"), high walk-ability, near the hospitals, CCs and the military base. We also wanted our drive to care for the properties to be no more than 15 minutes.
property #1 - .84 projected / .94 actual
property #2 - .86 projected / .92 actual (we have one more door to rent at this property, it is a storage unit that will bring in an extra $100/mo)
My DH does all the maintenance, the PM handles the tenants.
#1 clears about $830/mo. We've spent $340 on maintenance so far. The tenants came with it and have been there 7 and 16 years. the 16 year tenant is section 8, I don't think she's going anywhere. Both families are great, and when we drive by its obvious the tenants take pride in where they live.
#2 clears about $950/mo. (if we rent the extra garage, it will be $1050) It is a large enough lot that we maintain the back and side green space. the tenants each have their own front fenced yards they maintain. Maintenance so far has been "moving in" stuff like, 2 missing screens we didn't notice (DH made them from parts bought at HD $25), a new fire extinguisher and the tenants broke the screen door trying to slide the glass, which fell out and broke, that was $200 to replace. We never even tested the screen door, it was a total rookie mistake on our part as its the ONLY unit with a screen door, and had we been smart we would have removed it before renting.
Were on the hunt for #3 now, but like Las Vegas and Texas I fear our window of opportunity is dwindling. We don't want to look out of state. In fact we started looking out of state but because my DH's maintenance skill set, we make more when he can be actively involved.