Philadelphia or Houston area Real estate investment?

[flyersman]

Currently my wife and I are looking to get a 2nd rental house. We already own one in a nice area of Houston but are now considering another in the greater Philadelphia area where we live.

We have thought or getting exposure to real estate through REITS but we have really leaned towards townhouse, or duplex. We would do a flip but have zero experience.

From an investment standpoint we would finance the place or places and be looking around $250k-300k+ budget.

1. Are there any formulas you guys use to determine if something is worth while from cost - rent ratio?
2. Anyone familiar with either city and recommend any areas?
3. Any reason to buy a duplex over a single townhouse?
4. Thoughts on rental vs REIT?
5. Looked at realyshares and trying some equity investments there.
6. What do you guys use as to determine what you can get for a property in rent to attain the 50% and 1% rule? Do you just look on Trulia for what surrounds rentals are going for?

Furthermore in our current house we plan to rent it out in 2 years as we have list value. Purchased at $240k and value $215k. 3% loan and $168k left. Pay about $1110 PITI. Any reason to take the loss and just sell. Not opposed.

We have 401k and IRA maxed each year and consistent contributions to equities on the side so this would be a ways to diversify

[Jon Bon]

1. Are there any formulas you guys use to determine if something is worth while from cost - rent ratio?
1% and 50% rules are good for a newbie. I would look for more turnkey investments. You don't want to have to renovate to rent.
2. Anyone familiar with either city and recommend any areas?
Where are these 250k houses in Philly you speak of?! I dont know the area that well but I have family in the burbs in a 500k house that I dont even think is very nice.
3. Any reason to buy a duplex over a single townhouse?
Duplex > SFH I always feel you get some economies of scale, and spreads your risk.
4. Thoughts on rental vs REIT?
Do you like getting your hands dirty and fixing things? Do you want to do your own management?
6. What do you guys use as to determine what you can get for a property in rent to attain the 50% and 1% rule? Do you just look on Trulia for what surrounds rentals are going for?
That's a good start yes, but often they are already rented so you know you can get at least that! Again Id be looking for a turnkey property wtih tenants in place, this makes thing so much easier if you are just getting started.

Houston house? Did you move from there and rent out your existing SFH? What are the numbers on that? It would make me itchy to have a rental I could not drive too.

Good luck and happy hunting

[flyersman]

1. Are there any formulas you guys use to determine if something is worth while from cost - rent ratio?
1% and 50% rules are good for a newbie. I would look for more turnkey investments. You don't want to have to renovate to rent.
2. Anyone familiar with either city and recommend any areas?
Where are these 250k houses in Philly you speak of?! I dont know the area that well but I have family in the burbs in a 500k house that I dont even think is very nice.
3. Any reason to buy a duplex over a single townhouse?
Duplex > SFH I always feel you get some economies of scale, and spreads your risk.
4. Thoughts on rental vs REIT?
Do you like getting your hands dirty and fixing things? Do you want to do your own management?
6. What do you guys use as to determine what you can get for a property in rent to attain the 50% and 1% rule? Do you just look on Trulia for what surrounds rentals are going for?
That's a good start yes, but often they are already rented so you know you can get at least that! Again Id be looking for a turnkey property wtih tenants in place, this makes thing so much easier if you are just getting started.

Houston house? Did you move from there and rent out your existing SFH? What are the numbers on that? It would make me itchy to have a rental I could not drive too.

Good luck and happy hunting

There are lots of townhouses available in the suburbs of Philly that are good rentals in Blue Bell, Conshohocken, West Chester, PA

On the Houston side, we have a lot of family down there and visit 4-5 times a year.  Its a 2 bedroom condo in a rising area so its appreciated a lot.

Purchase: $155K
Worth Now: $168.5K in 2015
Loan: $123,750  after 25% down
Left on Loan: $102K
PITI $857 + HOA $200 = $1057
Rent: $1475

[flyersman]

Houston can be a great market for investment if you know the area.  It can be tricky because there is no to very little zoning and geographically the Houston area is giant.  The area around University of Houston and TSU is prime for gentrification and developers are already buying up land .  If you could find a townhouse in the medical center that was hip you could lure in young professionals, young doctors, and even students(UH, Rice, TSU).  Access to the rail in that area is a nice bonus plus its near everything.  Washington Ave and EaDo (East Downtown) are the hopping places for young people these days so that area is in demand.  A friend bought a nice townhouse with rooftop patio for around $300 not too long ago there.

Or you could go more blue collar neighborhood of which there are plenty and pick up SFH for $100-$175k, sometimes less in short sales or foreclosures.

Oh and be sure to consider the property taxes, MUD taxes, and HOA fees for each property evaluated because they vary quite a bit.

Here's a good article about the city if you want a better feel for the culture and attitude of Houston.  It's framed around sports but the meat of the article is so much more.

http://www.sbnation.com/college-football/2016/12/20/14006214/houston-cougars-football-tom-herman-major-applewhite

We got lucky finding a place in Heights before it blew up. Also looking at Montrose area

[waltworks]

Your rental is not a great one. If that's the sort of "deal" you are looking at, stick with REITs.

Go google the 1% and 50% rules (or read the stickies at the top of the page) to get started on how to evaluate a rental.

-W

[flyersman]

Your rental is not a great one. If that's the sort of "deal" you are looking at, stick with REITs.

Go google the 1% and 50% rules (or read the stickies at the top of the page) to get started on how to evaluate a rental.

-W

 That Houston place was unique as that area has hyper growth so prices or houses appreciate fast. I am also looking at a rental no so much from a making extra income as much as I want to build an asset for the future through house value. In 20yrs we can sell and I really just want the rent to pay for the mortgage.

[flyersman]

On a side note I just became an accredited investor on realtyshares and am considering getting some exposure there

[waltworks]

Historically, RE appreciates at about the rate of inflation.

You certainly can do great on appreciation. You can also lose your shirt, or more likely still - make nothing.

Seriously, go do a bunch more reading. Your strategy is statistically a losing one vs almost any other form of investment.

-W

[Another Reader]

Historically, RE appreciates at about the rate of inflation.

You certainly can do great on appreciation. You can also lose your shirt, or more likely still - make nothing.

Seriously, go do a bunch more reading. Your strategy is statistically a losing one vs almost any other form of investment.

-W

I have stopped responding to people that think this way and won't do even the most basic research, not to mention those folks egging them on.  I figure I will be buying their mistakes for 50 cents on the dollar in a few years when the markets go south.