Author Topic: seeking advice on where to buy rental property  (Read 7082 times)

MidwestMustache

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seeking advice on where to buy rental property
« on: January 29, 2014, 01:47:38 PM »
I have a big goal to purchase a rental property this year.  In an ideal world, I'd like to buy a rental property close to where I live now, however, I believe the major city that I currently reside in is a horrible place to buy because of high taxes, high county/state debt, corruption, etc. I find myself with the problem of - If I call a Realtor in FL, they will tell me they have the best properties available. If I call a Realtor in CA, AZ, or TX, they will just say the same exact thing out of personal interest.

Where can I find objective info/advice on where to purchase a rental property?
Which areas of the 48 states are better area for rental investments?

The maximum price for my future rental cant exceed $120k. I prefer a single family home (not a condo), in a warmer climate, and I'd hopefully prefer to own the place long-term(20 years). I would have the rental professionally managed(since I dont have the time or the expertise). Also, I cant pick up and move because I have a job that I cant leave.

?Anyone able to either (1) offer advice on better/best/suitable locations -or (2) advise to where I could get this info?

doyouknowwhy

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Re: seeking advice on where to buy rental property
« Reply #1 on: January 29, 2014, 09:27:30 PM »
Nevada is nice. One of the most depressed

mxer54

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Re: seeking advice on where to buy rental property
« Reply #2 on: January 30, 2014, 09:00:11 AM »
We are also looking to buy our long term rental....We are looking at California north of San Diego at this point.  We'd like to move there in about 2 years, so that would work out.  Mother-in-law has approx 15 properties around the Tampa area, housing is pretty low there.

CaptainCalf

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Re: seeking advice on where to buy rental property
« Reply #3 on: January 30, 2014, 12:28:25 PM »
If you're interested in buying a rental unit in an area that's not familiar to you I suggest you go and find an area that you like then find the nearest neighborhood with "A" rated schools (elementary, Middle & High School) then buy your rental there...

We have one that's actually within 300 yrds of an "A" rated elementary school and we haven't had any vacancies at all.  It has stayed 100% rented for the last 3 years...Good luck & Happy Hunting! 

Johnny Aloha

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Re: seeking advice on where to buy rental property
« Reply #4 on: January 30, 2014, 02:54:13 PM »
I'd recommend taking your time to determine your goals and research different markets. 

You say you are in the midwest with high property taxes (I immediately think of Ohio, Michigan, NY outside NYC, etc).  Some investors love those markets since the cash flow can be significant.  Other people would not ever invest in those markets because the demographic and economic trends have not been favorable in the past.  The difference between the investors is that they have different goals.


arebelspy

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Re: seeking advice on where to buy rental property
« Reply #5 on: January 30, 2014, 06:26:00 PM »
Johnny Aloha put basically what I was going to.

It all depends on your goals*. 

Map those out first, then you can start to narrow down potential markets.


*This involves more than "make money" or "high return."
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Ghost of the Wild

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Re: seeking advice on where to buy rental property
« Reply #6 on: February 03, 2014, 01:00:18 PM »
Research, research and more research!

My buddy and I have an investment property in California and it took us a lot of research and patience to find the property that was a good fit for our goals.  If we had rushed into anything we definitely would not have ended up with a positive cash flow property from the get go.

All of the information is available online.  View listings, view past sales, view rental listings, job markets, schools, Google maps, weather stats, etc.  You will begin to get a good idea on whether you think an area will work with your investment goals or not.

lakemom

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Re: seeking advice on where to buy rental property
« Reply #7 on: February 05, 2014, 07:58:58 AM »
Is there a particular reason that you want a warmer climate?  I'm assuming you're in the Midwest based on your screen name so I would see what areas of the Midwest might be a good fit for you.  Tennessee and Kentucky and Missouri are certainly warmer than the upper Midwest.  Indiana has seen net job gains in the past couple of years and I've heard that Indianapolis is a good market.  Ideally, you are going to need to nail down one or two markets you are very interested in and develop a relationship with a good investment realtor in those areas.

sedura

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Re: seeking advice on where to buy rental property
« Reply #8 on: February 13, 2014, 08:47:48 PM »
Subjectively, I'll say Raleigh, NC.  Yes, I'm a REALTOR here who specializes in selling an managing investment property.

Objectively, we're consistently in everyone's top ten places to live for this, that and the other.  so, I'm not the only one that thinks this is a great place to buy.  If you're under $120k, you can get a decent home that will rent for about $1000/month.  You can get a little bit better return in the sketchier areas, but I would stay away from those.

Dicey

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Re: seeking advice on where to buy rental property
« Reply #9 on: February 14, 2014, 12:01:10 AM »
I live in the Bay Area (CA). John Madden lives not far away and he owns a ton of property. He says he won't buy anything he can't walk to. Not sure if he was completely serious, but he makes a good point.

My first rental was 50+ miles from my apartment. I couldn't afford to buy anything where I lived in L.A., so I bought a 3+2 single family home in Riverside, where I grew up. I still had family in the area, and my job took me out that way on occasion. It worked, but it was still a PITA and I wouldn't recommend it, especially for a first rental property.

I think I'd wait if I were in your shoes. Not much to be gained by rushing into real estate, as it can be a lot easier to buy than to get rid of. Do your homework, save your money. There lots of houses out there and plenty of time. Good luck to you, whatever you decide.

arebelspy

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Re: seeking advice on where to buy rental property
« Reply #10 on: February 14, 2014, 09:09:19 AM »
it can be a lot easier to buy than to get rid of

That's a great point, I may steal that line.
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clarkfan1979

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Re: seeking advice on where to buy rental property
« Reply #11 on: February 15, 2014, 07:38:33 AM »
I like to look at the difference between what houses are selling for and the building cost. I bought my current house in Florida at 50% of the build cost. Good real estate deals are going to require at least 20% down or all cash to be competitive as an investor. Florida is still #1 in foreclosures because they are doing a "slow drip" to get rid of inventory. When all the foreclosures were on the market at once, they were selling for 20 cents on the dollar. Then the banks decided to reduce inventory and they have been able to get prices at 50 cents on the dollar. Because of the "slow drip" there will be real estate deals in Florida on foreclosures for a few more years. I think deals on non-distressed homes are pretty much gone, but there are always exceptions.

I like to buy in an area that I am somewhat familiar with the community, although I don't necessarily need to live. I like to buy and speculate on growing neighborhoods. You might get a good deal on a house, but if it's in a neighborhood on the decline, you won't see any long term profits. I also like to look at geographic maps of where people are moving over the last 5 years. Lastly, this might sound weird, but I would never buy in a "great" neighborhood because you are going to have to pay a premium for that which will reduce your profits. I would buy in a "good" neighborhood that I would speculate to be "great" in 10 years.   

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Dicey

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Re: seeking advice on where to buy rental property
« Reply #13 on: February 26, 2014, 07:00:31 PM »
it can be a lot easier to buy than to get rid of

That's a great point, I may steal that line.
It's all yours, with my compliments, kind sir!

prodarwin

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Re: seeking advice on where to buy rental property
« Reply #14 on: February 26, 2014, 07:08:20 PM »
  If you're under $120k, you can get a decent home that will rent for about $1000/month.

Doesn't that still fail to even meet the 1% rule? You'd need to get $1200 minimum, ideally much more on a $120K property, right?

arebelspy

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Re: seeking advice on where to buy rental property
« Reply #15 on: February 26, 2014, 07:49:09 PM »
  If you're under $120k, you can get a decent home that will rent for about $1000/month.

Doesn't that still fail to even meet the 1% rule? You'd need to get $1200 minimum, ideally much more on a $120K property, right?

Correct.  I would pass on a 120k property that rented for 1000 personally, in most markets.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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tj

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Re: seeking advice on where to buy rental property
« Reply #16 on: February 28, 2014, 10:59:07 PM »
We are also looking to buy our long term rental....We are looking at California north of San Diego at this point.  We'd like to move there in about 2 years, so that would work out.  Mother-in-law has approx 15 properties around the Tampa area, housing is pretty low there.

I definitely wouldn't be buying in CA right now. Prices are so much higher than 3-4 years ago, but rent has not increased by all that much.

honobob

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Re: seeking advice on where to buy rental property
« Reply #17 on: March 01, 2014, 04:14:04 PM »


I definitely wouldn't be buying in CA right now. Prices are so much higher than 3-4 years ago, but rent has not increased by all that much.
When inexperienced investors think "the numbers don't work"  is exactly the time a SMART investor buys.  Rents will follow and then the inexperienced investors will jump in driving UP the appreciation.  In California if you're buying in todays hot market you've probably already missed it.  Buy for tomorrows hot market.   

arebelspy

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Re: seeking advice on where to buy rental property
« Reply #18 on: March 01, 2014, 08:01:24 PM »
I definitely wouldn't be buying in CA right now. Prices are so much higher than 3-4 years ago, but rent has not increased by all that much.
When inexperienced investors think "the numbers don't work"  is exactly the time a SMART investor buys.  Rents will follow and then the inexperienced investors will jump in driving UP the appreciation.  In California if you're buying in todays hot market you've probably already missed it.  Buy for tomorrows hot market.

Right now we are saying "the numbers" don't work, which per your first sentence means it's the time to buy.  Then two sentences later you say you've already missed it.  Which is it?

Is it a good time to buy now, when the numbers don't work, hoping rents will follow, and then prices will shoot up more?  Why wouldn't 3-4 years ago be a better time to buy, despite the rents not following yet?

Is hindsight or blind luck the only way to invest?  What hot markets do you like right now?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

honobob

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Re: seeking advice on where to buy rental property
« Reply #19 on: March 02, 2014, 08:33:11 AM »
I definitely wouldn't be buying in CA right now. Prices are so much higher than 3-4 years ago, but rent has not increased by all that much.
When inexperienced investors think "the numbers don't work"  is exactly the time a SMART investor buys.  Rents will follow and then the inexperienced investors will jump in driving UP the appreciation.  In California if you're buying in todays hot market you've probably already missed it.  Buy for tomorrows hot market.

Right now we are saying "the numbers" don't work, which per your first sentence means it's the time to buy.  Then two sentences later you say you've already missed it.  Which is it?

1.  Who is "we"?
2.  The "numbers"  didn't work 3-4 years ago either (or ever) and YES it would have been better to buy then but everyone was on the internets saying how real estate was over and recovery would take 10-20-30 years!!
3.  I did not say you missed anything.  I don't think it is that hot of a market right now as I think there will be even bigger rent growth and appreciation in the next few years.  What I was saying is that if "today" you and everyone else thinks the market is hot THEN you have probably missed an opportunity to buy say, 3-4 years earlier.  Get it? 
4.  The real problem is with the people that don't use ALL the numbers and rule out investments on half assed analysis.  Do the math but do ALL the math.

honobob

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Re: seeking advice on where to buy rental property
« Reply #20 on: March 02, 2014, 08:54:44 AM »
I definitely wouldn't be buying in CA right now. Prices are so much higher than 3-4 years ago, but rent has not increased by all that much.
When inexperienced investors think "the numbers don't work"  is exactly the time a SMART investor buys.  Rents will follow and then the inexperienced investors will jump in driving UP the appreciation.  In California if you're buying in todays hot market you've probably already missed it.  Buy for tomorrows hot market.

 

Is hindsight or blind luck the only way to invest?  What hot markets do you like right now?
Well if you think it's luck then I've had a four decade winning streak!!  I'm not buying so the only time I'd be concerned about a "hot" market is when I plan to sell.  Remember, BUY LOW, SELL HIGH.  As far as places to make a good purchase I'd say Honolulu and Bay Area are still good and expect major growth in the next few years.